GRN 80587 FEBRUARY 8, 1989

WENPHIL CORPORATION VS NLRC

GANCAYCO, J.:

FACTS:

Private respondent Mallare had an altercation with a co-employee. The following day, the Operations
Manager served them memorandum of suspension and in the afternoon of that same day, Mallare was
dismissed from work. Labor Arbiter dismissed Mallare’s petition for unfair labor practice for lack of
merit. NLRC reversed the decision and ordered the reinstatement of Mallare with full backwages of one
year without qualification and deduction.

ISSUE:

Whether or not an employee dismissed for just cause but without due process be reinstated to work.

RULING:

The basic requirement of due proves is that which hears before it condemns, proceeds upon inquiry and
renders judgment only after trial. The dismissal of an employee must be for a just cause and after due
process. Petitioner committed an infraction of the second requirement thus it must be imposed a
sanction for its failure to give a formal notice and conduct an investigation as required by law before
dismissing Mallare from employment. Petitioner must indemnify the dismissed employee which
depends on the facts of each case and the gravity of the omission committed by the employer.

Where the private respondent appears to be of violent temper, caused trouble during office hours and
even defied his supervisors as they tried to pacify him, he should not be rewarded with re-employment
and backwages. The dismissal of the respondent should be maintained.
Serrano vs. NLRC / ISETANN - GR No. 117040 Case Digest

FACTS:

Serrano was a regular employee of Isetann Department Store as the head of Security Checker. In 1991,
as a cost-cutting measure, Isetann phased out its entire security section and engaged the services of an
independent security agency. Petitioner filed a complaint for illegal dismissal among others. Labor
arbiter ruled in his favor as Isetann failed to establish that it had retrenched its security section to
prevent or minimize losses to its business; that private respondent failed to accord due process to
petitioner; that private respondent failed to use reasonable standards in selecting employees whose
employment would be terminated. NLRC reversed the decision and ordered petitioner to be given
separation pay.

ISSUE:

Whether or not the hiring of an independent security agency by the private respondent to replace its
current security section a valid ground for the dismissal of the employees classed under the latter.

RULING:

An employer’s good faith in implementing a redundancy program is not necessarily put in doubt by the
availment of the services of an independent contractor to replace the services of the terminated
employees to promote economy and efficiency. Absent proof that management acted in a malicious or
arbitrary manner, the Court will not interfere with the exercise of judgment by an employer.

If termination of employment is not for any of the cause provided by law, it is illegal and the employee
should be reinstated and paid backwages. To contend that even if the termination is for a just cause, the
employee concerned should be reinstated and paid backwages would be to amend Art 279 by adding
another ground for considering dismissal illegal.

If it is shown that the employee was dismissed for any of the causes mentioned in Art 282, the in
accordance with that article, he should not be reinstated but must be paid backwages from the time his
employment was terminated until it is determined that the termination of employment is for a just
cause because the failure to hear him before he is dismissed renders the termination without legal
effect.
JENNY M. AGABON v. NLRC, GR No. 158693, 2004-11-17

Facts:

Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing
ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as
gypsum board and cornice installers on January 2, 1992[2] until February 23, 1999 when they were
dismissed for abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money claims[3] and on December
28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private
respondent to pay the monetary claims.

On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned
their work, and were not entitled to backwages and separation pay.

Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court
of Appeals.

The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had
abandoned their employment but ordered the payment of money claims.

Petitioners also claim that private respondent did not comply with the twin requirements of notice and
hearing.

Private respondent, on the other hand, maintained that petitioners were not dismissed but had
abandoned their work.

Issues:

whether petitioners were illegally dismissed.

Ruling:

To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins
the employer to give the employee the opportunity to be heard and to defend himself.

Abandonment is the deliberate and unjustified refusal of an employee to resume his employment.[14]
It is a form of neglect of duty, hence, a just cause for termination of employment by the employer.[15]
For a valid finding... of abandonment, these two factors should be present: (1) the failure to report for
work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-
employee relationship, with the second as the more determinative factor which is manifested by... overt
acts from which it may be deduced that the employees has no more intention to work. The intent to
discontinue the employment must be shown by clear proof that it was deliberate and unjustified.

an employee who deliberately absented from work without leave or permission from his employer, for
the purpose of looking for a job elsewhere, is considered to have abandoned his job.

The dismissal should be upheld because it was established that the petitioners abandoned their jobs to
work for another company. Private respondent, however, did not follow the notice requirements and
instead... argued that sending notices to the last known addresses would have been useless because
they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse
because the law mandates the twin notice requirements to the employee's last... known address.[21]
Thus, it should be held liable for non-compliance with the procedural requirements of due process.

that in cases involving dismissals for cause but without observance of the twin requirements of notice
and hearing, the better rule is to abandon the

Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing
sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil.

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should
not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the
employee for the violation of his statutory rights
Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has
been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.

The violation of the petitioners' right to statutory due process by the private respondent warrants the
payment of indemnity in the form of nominal damages.

Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00.

Riviera Home Improvements, Inc. is further ORDERED to pay each of the petitioners the amount of
P30,000.00 as nominal damages for non-compliance with statutory due process.

Principles:

Labor Law

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should
not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the
employee for the violation of his statutory rights

Political Law... we affirmed the presumption that all constitutional provisions are self-executing.

to declare otherwise would result in the pernicious situation wherein by mere inaction and... disregard
by the legislature, constitutional mandates would be rendered ineffectual.

In self-executing constitutional provisions, the legislature may still enact legislation to facilitate the
exercise of powers directly granted by the constitution, further the operation of such a provision,
prescribe a practice to be used for its enforcement, provide... a convenient remedy for the protection of
the rights secured or the determination thereof, or place reasonable safeguards around the exercise of
the right. The mere fact that legislation may supplement and add to or prescribe a penalty for the
violation of a self-executing... constitutional provision does not render such a provision ineffective in the
absence of such legislation. The omission from a constitution of any express provision for a remedy for
enforcing a right or liability is not necessarily an indication that it was not intended to be... self-
executing. The rule is that a self-executing provision of the constitution does not necessarily exhaust
legislative power on the subject, but any legislation must be in harmony with the constitution, further
the exercise of constitutional right and make it more available.

Subsequent legislation however does not necessarily mean that the subject constitutional provision is
not, by itself, fully enforceable.

Thus, the constitutional mandates of protection to labor and security of tenure may be deemed as self-
executing in the sense that these are automatically acknowledged and observed without need for any
enabling legislation. However, to declare that the constitutional provisions... are enough to guarantee
the full exercise of the rights embodied therein, and the realization of ideals therein expressed, would
be impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of being
overbroad and exaggerated. The guarantees... of "full protection to labor" and "security of tenure",
when examined in isolation, are facially unqualified, and the broadest interpretation possible suggests a
blanket shield in favor of labor against any form of removal regardless of circumstance. This
interpretation... implies an unimpeachable right to continued employment-a utopian notion, doubtless-
but still hardly within the contemplation of the framers. Subsequent legislation is still needed to define
the parameters of these guaranteed rights to ensure the protection and promotion, not... only the rights
of the labor sector, but of the employers' as well. Without specific and pertinent legislation, judicial
bodies will be at a loss, formulating their own conclusion to approximate at least the aims of the
Constitution.

Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a source of a positive enforceable
right to stave off the dismissal of an employee for just cause owing to the failure to serve proper notice
or hearing. As manifested by several framers of the 1987

Constitution, the provisions on social justice require legislative enactments for their enforceability.
TOPIC: FAILURE TO COMPLY

JAKA FOOD vs. PACOT et al

G.R. No. 151378

March 28, 2005

FACTS: Respondents Pacot et al were earlier hired by petitioner JAKA Foods

Processing Corporation until the latter terminated their employment because the
corporation was “in dire financial straits”. It is not disputed, however, that the
termination was effected without JAKA complying with the requirement under
Article 283 of the Labor Code regarding the service of a written notice upon the
employees and the DOLE at least 1 month before the intended date of
termination.
In time, respondents separately filed with the regional Arbitration Branch of the
NLRC complaints for illegal dismissal, underpayment of wages and nonpayment
of SIL and 13th month pay against JAKA and its HRD Manager.
ISSUE: is the dismissal valid, because of non-compliance with the notice
requirement?
HELD: the dismissal is legal, but employer should pay nominal damages for
non-compliance witht the notice requirement
In the case of Agabon vs. NLRC, the court had the opportunity to resolve a similar
question. Therein, we found that the employees committed a grave offense, i.e.,
abandonment, which is a form of a neglect of duty which, in turn, is one of
the just causes enumerated under Article 282 of the Labor Code. In said case,
we upheld the validity of the dismissal despite non-compliance with the notice
requirement of the Labor Code. However, we required the employer to pay the
dismissed employees nominal damages for non-compliance with statutory due
process.
**
The difference between Agabon and the instant case is that in the former, the
dismissal was based on a just cause under Article 282 of the Labor Code while
in the present case, respondents were dismissed due to retrenchment, which is
one of the authorized causes under Article 283 of the same Code.
A dismissal for just cause under Article 282 implies that the employee
concerned has committed, or is guilty of, some violation against the employer, i.e.
the employee has committed some serious misconduct, is guilty of some fraud
against the employer, or, as in Agabon, he has neglected his duties. Thus, it can
be said that the employee himself initiated the dismissal process.
On another breath, a dismissal for an authorized cause under Article 283
does not necessarily imply delinquency or culpability on the part of the
employee. Instead, the dismissal process is initiated by the employer’s exercise
of his management prerogative, i.e. when the employer opts to install labor
saving devices, when he decides to cease business operations or when, as in this
case, he undertakes to implement a retrenchment program.
Accordingly, it is wise to hold that: (1) if the dismissal is based on a
just cause under Article 282 but the employer failed to comply with
the notice requirement, the sanction to be imposed upon him
should be tempered because the dismissal process was, in effect,
initiated by an act imputable to the employee; and (2) if the
dismissal is based on an authorized cause under Article 283 but the
employer failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal process was
initiated by the employer’s exercise of his management
prerogative.

The records before us reveal that, indeed, JAKA was suffering from serious
business losses at the time it terminated respondents’ employment.
**
The clear-cut distinction between a dismissal for just cause under Article 282
and a dismissal for authorized cause under Article 283 is further reinforced by
the fact that in the first, payment of separation pay, as a rule, is not required,
while in the second, the law requires payment of separation pay.
We find the CA to have been in error when it ordered JAKA to pay respondents
separation pay equivalent to 1 month salary for every year of service. This is
because in Reahs Corporation vs. NLRC, we made the following declaration:
“The rule, therefore, is that in all cases of business closure or cessation of
operation or undertaking of the employer, the affected employee is entitled to
separation pay. This is consistent with the state policy of treating labor as a
primary social economic force, affording full protection to its rights as well as its
welfare. The exception is when the closure of business or cessation of
operations is due to serious business losses or financial reverses; duly proved, in
which case, the right of affected employees to separation pay is lost for obvious
reasons. xxx”
G.R. No. 112203 December 13, 1994

ROBERTO SEGISMUNDO and ROGELIO MONTALVO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division) and ASSOCIATED FREIGHT
CONSOLIDATORS, INC., respondents.

Herminio L. Luis for petitioners.

Belo, Gozon and Elma for respondent.

RESOLUTION

BIDIN, J.:

Petitioners Roberto Segismundo and Rogelio Montalvo were regular employees of private
respondent Associated Freight Consolidators, Inc., a corporation engaged in the air freight
forwarding business. It picks up parcels and packages from different parts of the globe and delivers
them "door to door" to their consignees or addresses in the country. Segismundo was a driver
whereas Montalvo was a loader/helper. They worked as a team, delivering packages to their
respective addresses or consignees.

Sometime in 1988, private respondent began receiving complaints from its client/consignees
regarding missing items in their packages which were delivered by private respondent's personnel.
The number of complaints increased, to the point that some of private respondent's delivery
arrangements were in danger of being discontinued by disgruntled clients. This prompted private
respondent to conduct an exhaustive investigation to determine whether its delivery personnel were
involved in the pilferages complained of. The investigation yielded the unfortunate result that the
pilferages could only have taken place while the packages were in the custody of private
respondent's delivery personnel.

Based on tabulated records, private respondent discovered that of the 27 complaints of pilferages
lodged during the period from August 1988 to February 1989, 6 of the complaints involved packages
delivered by petitioners' delivery team.

In view of the results of the investigation, private respondent's General Manager called a meeting on
February 17, 1989 of all delivery personnel to discuss the pilferage incidents. During the meeting,
petitioners denied any involvement therein. They were allowed to inspect the records gathered in the
course of the company investigation. On the same day, petitioners were given notices by
management, placing them under preventive suspension effective February 18, 1989.

On March 15, 1989, private respondent formally terminated petitioner's services without first
conducting a hearing.

Consequently, petitioners filed on May 8, 1989 a complaint for illegal suspension and dismissal,
alleging that their dismissal was not based on a just cause and was effected in violation of their right
to due process.
On December 5, 1990, the Labor Arbiter rendered a decision in favor of petitioners, ordering their
reinstatement with backwages, damages and attorney's fees.

Not satisfied with the decision, private respondent appealed, and on September 30, 1993, the public
respondent reversed the decision of the Labor Arbiter, upholding petitioners' dismissal as valid.

Hence, this petition.

We uphold the finding of the public respondent that petitioners' dismissal was for a just cause. The
public respondent's findings on this score are fully supported by the results of the investigation
conducted by private respondent regarding the pilferages, and these results were presented before
the Labor Arbiter. The conclusion that petitioners were involved in the pilferages was solidly
premised on the tabulated complaints of consignees, the records of pilfered packages delivered by
petitioner's team and delivery receipts. No evidence was presented to show that private respondent
was motivated by any ill feeling or bad faith in dismissing petitioners. On the contrary, it could have
been more difficult for private respondent to dismiss petitioners considering that petitioner
Segismundo was hired upon the recommendation of respondent's General Manager himself while
petitioner Montalvo was hired upon the recommendation of a member of private respondent's Board
of Directors. In view of these recommendations, petitioners could not have been dismissed unless
there was sufficient cause therefor. It is thus clear that private respondent's decision to terminate
petitioners' services was prompted by the necessity to protect its good name and interests.

Private respondent's documentary evidence showing the culpability of petitioners should prevail over
petitioners' uncorroborated explanations and
self-serving denials regarding their involvement in the pilferages. All administrative determinations
require only substantial proof and not clear and convincing evidence (Manalo v. Roldan-Confesor,
215 SCRA 808). Proof beyond reasonable doubt of the employee's misconduct is not required, it
being sufficient that there is some basis for the same or that the employer has reasonable ground to
believe that the employee is responsible for the misconduct, and his participation therein renders
him unworthy of the trust and confidence demanded by his position (Riker v. Ople, 155 SCRA 85).
Thus, petitioners cannot assert that the public respondent closed its eyes to their evidence. The
latter's findings are supported by substantial evidence which goes beyond the minimum evidentiary
support required by law.

However, we find that petitioners were dismissed from employment without being accorded due
process. As correctly observed by the Solicitor General, non-compliance with the twin requirements
of notice and hearing is fatal because these requirements are conditions sine qua non before a
dismissal may be validly effected (Manebo vs. NLRC, G.R. No. 107721, January 10, 1994, citing Tiu
v. NLRC, 215 SCRA 540). Neither of these two requirements can be dispensed with without running
afoul with the due process requirement of the Constitution (Century Textile Mills, Inc. v. NLRC, 161
SCRA 528).

In the instant case, the records show that private respondent failed to give petitioners the benefit of a
hearing. The meeting called by the General Manager on February 17, 1989 does not qualify as the
hearing required by law since the same was apparently for the purpose of merely informing the
delivery personnel about the investigation conducted by the company on the pilferages, and to serve
petitioners and two other employees notices of their preventive suspension. Barely a month later,
petitioners were summarily dismissed.

While it may be true that petitioners were allowed to explain their side during the February 17, 1989
meeting, the fact remains that no hearing was actually conducted before petitioners' services were
terminated. The opportunity given to petitioners during the meeting to answer the charges against
them and to verify the records of the pilferage cases is not the kind of "ample opportunity"
contemplated by law, which connotes every kind of assistance that management must accord to the
employee to enable him to prepare adequately for his defense including legal representation (Abiera
v. NLRC, 215 SCRA 476). In the case at bar, both petitioners denied any involvement in the
pilferages at the February 17, 1989 meeting, and these denials warranted at least a separate
hearing to enable petitioners to fully air their side. Consultations or conferences are not a substitute
for the actual observance of notice and hearing (Pepsi-Cola Bottling Co. v. NLRC, 210 SCRA 277).

Moreover, that petitioners simply "kept silent" from the time they were suspended until they were
formally dismissed is not adequate to constitute a waiver of their rights. Notice and hearing must be
accorded by an employer, even though the employee does not affirmatively demand it
(Century, supra.).

Suffice it to say that in this case, private respondent failed to comply with the requirement that the
decision to dismiss an employee must come only after he is given a reasonable period from receipt
of the first notice within which to answer the charge, an ample opportunity to be heard and to defend
himself with the assistance of a representative if he so desires. Such non-compliance is fatal and
constitutes an infringement of petitioners' constitutional right to due process. On this score, the
public respondent manifestly erred in holding otherwise.

It appearing that petitioners were dismissed for cause but without the observance of due process,
the ruling in Wenphil Corporation v. NLRC, 170 SCRA 69, as cited by the Solicitor General in its
Comment, squarely applies to the case at bar:

The Court holds that the policy of ordering the reinstatement to the service of an
employee without loss of seniority and the payment of his wages during the period of
his separation until his actual reinstatement . . . when it appears he was not afforded
due process, although his dismissal was found to be for just and authorized cause in
an appropriate proceeding in the Ministry of Labor and Employment, should be re-
examined. It will be highly prejudicial to the interests of the employer to impose on
him the services of an employee who has been shown to be guilty of the charges that
warranted his dismissal from employment. Indeed, it will demoralize the rank and file
if the undeserving, if not undesirable, remains in the service.

xxx xxx xxx

However, the petitioner (employer) must nevertheless be held to account for failure
to extend to private respondent (employee) his right to an investigation before
causing his dismissal. The rule is explicit as above discussed. The dismissal of an
employee must be for just or authorized, cause and after due process. Petitioner
committed an infraction of the second requirement. Thus, it must be imposed a
sanction for its failure to give a formal notice and conduct an investigation as
required by law before dismissing petitioner from employment. Considering the
circumstances of this case, petitioner must indemnify the private respondent the
amount of P1,000.00. The measure of this award depends on the facts of each case
and the gravity of the omission committed by the employer. (Emphasis supplied).

Accordingly, the assailed decision of the public respondent NLRC dated September 30, 1993
reversing and setting aside the decision of the Labor Arbiter and ordering the dismissal of petitioners'
complaint for illegal dismissal is hereby AFFIRMED WITH MODIFICATION that private respondent
Associated Freight Consolidators, Inc. is hereby ORDERED to pay each of the petitioners the sum of
P1,000.00 as penalty for failing to conduct a hearing prior to petitioners' dismissal from employment.
This Order is immediately executory.

SO ORDERED.
Case Digest: Bustamante vs NLRC, G.R. No. 111651 March
15, 1996
Facts – Petitioners were hired for the same job on various periods – broken employment or services were
not continuous – but the services rendered when added together comprise over a year of service in total.
Respondent company and petitioner signed a 6-month contract but petitioners were fired earlier than
what was stipulated in the contract on the grounds of poor performance due to old age.

Petitioner filed a complaint before the Regional Arbitration Branch of the National Labor Relations
Commission (NLRC) in Davao City.

First Decision of NLRC: In favour of petitioner; their dismissal by respondent company was declared
illegal; ordering respondent company to reinstate the petitioner employees and pay for their 6 months
backwages. If reinstatement is not possible, an additional compensation equivalent to 1 month salary
must be given to the petitioners. Petitioners’ claim for underpayment was dismissed for lack of merit.

Appeal of Respondent: the respondent Evergreen Farms Inc. made an appeal but was dismissed by
NRLC. It again filed a motion for reconsideration and this time the decision of NLRC was favourable to
the respondent company, “public respondent issued a second resolution on 3 May 1993 affirming its
earlier resolution on illegal dismissal but deleting the award of backwages on the ground that the
termination of petitioners' employments "was the result of the latter's (private respondent) mistaken
interpretation of the law and that the same was therefore not necessarily attended by bad faith, nor
arbitrariness”

Action (case at bar before the Supreme Court) – petition for certiorari, from the decision of NLRC –
after appeal from respondent company—setting aside its previous decision to provide petitioners
backwages.

Issue - whether or not petitioners (employees of the banana plantation) are entitled to backwages after a
finding by the NLRC itself that they had become regular employees after serving for more than one (1)
year of broken or non-continuous service as probationary employees.

Ruling – In favour of petitioner, upholding their illegal dismissal invoking Article 280 of the Labor Code
which draws a line between regular and casual employment. The regular employees consist of the
following:
1) those engaged to perform activities which are usually necessary or desirable in the usual business or
trade of the employer; and
2) those who have rendered at least one year of service whether such service is continuous or broken.

In the case at bar, petitioners were employed at various periods from 1985 to 1989 for the same kind of
work they were hired to perform in September 1989. Some of the petitioners were hired as far back as
1985, although the hiring was not continuous. They were hired and re-hired in a span of from two to four
years to do the same type of work which conclusively shows the necessity of petitioners' service to the
respondent company's business.

Bases of Court decision:

 Petitioners have, therefore, become regular employees after performing activities which are
necessary in the usual business of their employer. But, even assuming that the activities of petitioners in
respondent company's plantation were not necessary or desirable to its business, we affirm the public
respondent's finding that all of the complainants (petitioners) have rendered non-continuous or broken
service for more than one (1) year and are consequently considered regular employees.
 The act of hiring and re-hiring the petitioners over a period of time without considering them as
regular employees evidences bad faith on the part of private respondent.
WHEREFORE, the Resolution of the National Labor Relations Commission dated 3 May 1993 is modified
in that its deletion of the award for backwages in favor of petitioners, is SET ASIDE. The decision of the
Labor Arbiter dated 26 April 1991 is AFFIRMED with the modification that backwages shall be paid to
petitioners from the time of their illegal dismissal on 25 June 1990 up to the date of their reinstatement. If
reinstatement is no longer feasible, a one-month salary shall be paid the petitioners as ordered in the
labor arbiter's decision; in addition to the adjudged backwages.
 Pioneer texturizing Corp. Vs, NLRC
GR 118651, October 16, 1997

Facts: As reviser/trimmer, respondent de Jesus based her assigned work on a paper note posted by
petitioners. The posted paper which contains the corresponding price for the work to be accomplished by
a worker is identified by its P.O. Number. On August 15, 1992, de Jesus worked on P.O. No. 3853. Three
days later, de Jesus received from petitioners' personnel manager a memorandum requiring her to explain
why no disciplinary action should be taken against her for dishonesty and tampering of official records
and documents with the intention of cheating as P.O. No. 3853 allegedly required no trimming. In her
handwritten explanation, de Jesus maintained that she merely committed a mistake in trimming and that
she may have been negligent in presuming that the same work was to be done with P.O. No. 3853, but
not for dishonesty or tampering. Nonetheless, respondent was terminated from employment. On
September 22, 1992, de Jesus filed a complaint for illegal dismissal against petitioners. Labor Arbiter held
petitioners guilty of illegal dismissal. And so petitioners appealed to public respondent National Labor
Relations Commission (NLRC). The NLRC declared that the status quo between them should be
maintained and affirmed the Labor Arbiter's order of reinstatement, but without backwages. Petitioners
insist that the NLRC gravely abused its discretion in holding that de Jesus is entitled to reinstatement to
her previous position for she was not illegally dismissed in the first place. In support thereof, petitioners
quote portions of the NLRC decision which stated that "respondents [petitioners herein] cannot be
entirely faulted for dismissing the complainant" 3 and that there was "no illegal dismissal to speak of in
the case at bar".

The arguments lack merit. It distinctly appears that petitioners' accusation of dishonesty and tampering
of official records and documents with intention of cheating against de Jesus was not substantiated by
clear and convincing evidence. Petitioners simply failed, both before the Labor Arbiter and the NLRC, to
discharge the burden of proof and to validly justify de Jesus' dismissal from service. The law, in this light,
directs the employers, such as herein petitioners, not to terminate the services of an employee except for
a just or authorized cause under the Labor Code. Lack of a just cause in the dismissal from service of an
employee, as in this case, renders the dismissal illegal, despite the employer's observance of procedural
due process. And while the NLRC stated that "there was no illegal dismissal to speak of in the case at bar"
and that petitioners cannot be entirely faulted therefor, said statements are inordinate pronouncements
which did not remove the assailed dismissal from the realm of illegality. Neither can these
pronouncements preclude us from holding otherwise.
Private respondent de Jesus, for her part, maintains that petitioners should have reinstated her
immediately after the decision of the Labor Arbiter ordering her reinstatement was promulgated since
the law mandates that an order for reinstatement is immediately executory. An appeal, she says, could
not stay the execution of a reinstatement order for she could either be admitted back to work or merely
reinstated in the payroll without need of a writ of execution. De Jesus argues that a writ of execution is
necessary only for the enforcement of decisions, orders, or awards which have acquired finality. In effect,
de Jesus is urging the Court to re-examine the ruling laid down in Maranaw.
G.R. No. 74531 June 28, 1988

PIZZA INN/CONSOLIDATED FOODS CORPORATION, petitioner,

vs.
NLRC, NLRC SHERIFF and FELICIDAD FONTANILLA, respondents.

PARAS, J.:

Before Us is a Petition questioning the ruling of the National Labor Relations Commission (NLRC for short) affirming the ruling of the Labor
Arbiter in a case for illegal dismissal for unpaid wages, underpaid overtime pay and emergency living allowance, non-payment of legal
holiday pay and premium pay for holidays and rest days filed by private respondent Felicidad Pontanilla against petitioner. The Labor Arbiter
directed the reinstatement of complainant Felicidad Fontanilla to her former or equivalent position with full back wages from date of dismissal
on April 24,1982 up to actual date of reinstatement without loss of seniority rights and privileges as she would receive had she not been
dismissed, and to pay her unpaid wages from April 1 up to April 23, 1982 in the amount of P761.24.

Private respondent was employed by petitioner in its Quad Carpark Makati outlet on a probationary
status with a monthly basic salary of P500.00. Before the expiration of the 6-month probationary
period, Felicidad Fontanilla resigned. Claiming that she was forced to resign by the petitioner, the
former filed a complaint against the latter.

Petitioner appealed from the decision of the Labor Arbiter favoring private respondent. Petitioner's
appeal was dismissed by the NLRC for lack of merit in its resolution promulgated on May 17,1983.
Petitioner filed its Motion for Reconsideration, a motion which was not entertained by the NLRC in its
resolution dated August 15, 1983, thru Labor Arbiter Pedro C. Ramos (Annex "B," p. 69, Rollo).

Petitioner came to Us by filing a petition for certiorari docketed as G.R. No. 65535. But before any
responsive pleading was filed, petitioner withdrew said petition and instead filed a second motion for
reconsideration with the NLRC which was likewise denied by the NLRC.

Petitioner filed a motion to elevate the case to the Commission en banc which likewise denied said
motion for lack of merit in its resolution dated May 23,1984.

Petitioner filed anew before Us a petition for certiorari with preliminary injunction docketed as G.R.
No. 67619. In Our resolution dated June 25, 1984 We resolved to dismiss the petition for lack of
merit. Petitioner filed a motion for reconsideration which was denied in Our resolution dated
September 10, 1984, ordering entry of final judgment of Our denial. Again, petitioner filed its second
motion for reconsideration which We resolved to deny and to expunge from the records of this case
(G.R. No. 67619). The order of dismissal of the petition for certiorari (In G.R. No. 67619) became
final and executory on September 25, 1984 as per Entry of Judgment (Annex "A" p. 68, Rollo).

Due to the finality of the judgment in this case, the Labor Arbiter below issued a second alias Writ of
Execution dated September 8, 1984 against petitioner wherein the amount involved (representing
backwages of private respondent among others, from April 24, 1982 to September 30, 1984)
amounted to P29,001.00 as per computation of the Socio-Economic Analyst of the Commission.

Petitioner filed a Motion to Recompute and to quash/stay writ of execution, notice of garnishment
under supersedeas bond on October 19, 1984. Respondent opposed said motion in both their
Urgent Ex-parte Manifestation and ex parte manifestation dated October 22,1984 and December
5,1984 respectively.
The Labor Arbiter Pelagio A. Carpio issued on January 21, 1985, an order dismissing the motion of
petitioner for lack of merit and ordered it to proceed with the enforcement of the second alias writ of
execution dated October 8, 1984 (Annex "H," p. 70, Rollo).

Petitioner filed an appeal from said order of the Labor Arbiter. In reply, respondent Felicidad
Fontanilla stated that the petitioner was appealing only on the order of the Labor Arbiter denying the
motion to recompute which is only an interlocutory order and should not be entertained on appeal.

The third alias writ of execution of the original decision dated August 31, 1982 was partially satisfied
on April 3, 1985, when complainant received the amount of P29,001.00 (Annex "J," p. 82, Rollo) as
computed and prepared by the Socio-Economic Analyst covering the period from April 25, 1982 to
September 30, 1984 which amount included the emergency allowance, 13th month pay and other
privileges which complainant would have received, had she not been dismissed.

Thereafter, counsel for petitioner filed a Manifestation dated September 16, 1985 seeking to stop the
running of subsequent back wages from the time the business allegedly closed shop on January
1984.

Felicidad Fontanilla filed her counter manifestation alleging that petitioner refused to reinstate
complainant despite several representations of private respondent to the petitioner by the NLRC
Sheriff at the latter's outlet in Cinema Square, Legaspi Street, Makati, Metro Manila or Greenbelt
Park, Makati, contending that the Quad Park outlet wherein Felicidad Fontanilla worked was merely
transferred and not really closed contrary to the allegations of petitioner (Annex "K," p. 83, Rollo).

On October 10, 1985, the NLRC en banc denied appeal of petitioner. A motion for Reconsideration
filed on October 31, 1985 by petitioner was likewise denied by the same body for lack of merit. Such
denial is now the subject on appeal by certiorari to Us raising the:

Issue: May an employer be ordered to reinstate private respondent after the closure
of its branch or outlet where private respondent was employed, and to pay private
respondent back wages even after the date of closure and continuously without limit
considering that there was no way to reinstate the workers anymore?

Be it noted that it would now be idle to dispute the legality of the order to reinstate and pay back
wages to the complainant, it appearing that said order has become final. All that remain to be
determined are the matter of reinstatement, and the amount of backwages to be paid.

Petitioner maintains that complainant should not be paid her backwages beyond the date of closure
of business on January 31, 1984. The records show that the petitioner's Pizza-Inn Quad Carpark
outlet ceased its business operations due to poor business sales of pizzas. The fact of closure was
properly reported to the Municipal Treasurer of Makati wherein petitioner paid the required closure
fee under O.R. No. 7890507 on January 20, 1984 (Annex "G," p. 37, Rollo). Their contract of lease
with Ayala Corporation over said premises was also terminated as of January 31,1984 as per letter
of Mr. Simon C. Mossesgeld, Area Manager of the Ayala Corporation, Commercial Center Division
(Annex "H," p. 38, Rollo). Subsequently, Pizza's only two other remaining outlets in the Philippines
were also closed and its franchise surrendered to Pizza-Inn Texas, U.S.A. as evidenced by a letter
dated April 8, 1986 (Annex "F," p. 180, Rollo). Hence, the closure of the business rendered the
reinstatement of complainant to her previous position impossible but she is still entitled to the
payment of backwages up to the date of dissolution or closure. We have ruled that:

An employer found guilty of unfair labor practice in dismissing his employee may not
be ordered so to pay backwages beyond the date of closure of business where such
 closure was due to legitimate business reasons and not merely an attempt to defeat
the order of reinstatement" (Colombian Rope Co. of the Phil. v. Tacloban Association
of Laborers and Employees, No. L-14848, October 31, 1982, 6 SCRA 425, also citing
Durable Shoe Factory vs. CIR, L-77831, May 31, 1956).

Claimant imputes bad faith on the part of petitioner in refusing to reinstate her in petitioner's other
Pizza Inn outlets or branches then still existing. There is indeed authority for the proposition that
complainant be reinstated to her former position or substantially equivalent employment, if available.
However, where an employer suffered business recession, as in the case at bar, such that its
commercial or financial circumstances have changed forcing it to close one outlet or branch (and
subsequently all other outlets also closed shop), respondent Commission, assuming that petitioner
was guilty of unfair labor practice cannot compel the employer to reinstate private respondent if such
reinstatement may exceed the petitioner's needs under the altered conditions. Normally each outlet
had only a sufficient number of employees who served pizzas. It has its own "plantilla" and by
accommodating complainant, it might prejudice and displace other employees. Reinstatement pre-
supposes that the previous position from which one had been removed still exists or that there is an
unfilled position more or less of similar nature as the one previously occupied by the employee.
Admittedly, no such position is available. Reinstatement therefore becomes a legal impossibility. The
law cannot exact compliance with what is impossible. Moreover an employer is privileged to go out
of business by closing the same regardless of his reasons especially if done in good faith and due to
causes beyond his control like heavy business losses. To deprive him of such privilege would be
oppressive and inhuman. In such cases, the dismissed employee can no longer be reinstated but
shall be entitled to backwages up to the date of dissolution or closure (but not exceeding three
years).

It is on record that the Socio-Economic Analyst of the public respondent computed that award of
P29,001.00 covering the period from April, 1982 to September, 1984, which amount complainant
admittedly received after the NLRC Sheriff garnished from the amount deposited at the Philippine
Commercial and International Bank despite the pendency of petitioner's appeal questioning the order
of the Labor Arbiter's denial of petitioner's Motion to Recompute and to Quash/Stay Writ of
Execution/Notice of Garnishment under Supersedeas Bond. Petitioner alleged in said appeal that it
was not furnished a copy of such computation nor a chance to refute the same. Petitioner insisted
too that award of backwages should be reasonably limited up to January, 1984 only.
Notwithstanding such contentions, private respondent immediately caused the further computation of
backwages from October 1, 1984 up to November 15, 1985 in the additional sum of P23,188.21
under the pretext that petitioner has not yet reinstated private respondent (Annex "A," p. 114, Rollo).

As aforementioned the order of reinstatement becomes a legal impossibility as the outlet closed on
January 31, 1984. Computing backwages beyond January 1984, the date of closure, would not only
be unjust but confiscatory as well as violative of the Constitution depriving the petitioner of his
property rights. The unlimited award would not only prejudice the herein petitioner but would, as well,
impose a crushing financial burden on the already financially distressed petitioner corporation. The
fact that the computation of the backwages was done ex-parte without giving petitioner a chance or
opportunity to comment on said computation is clearly a denial of due process.

WHEREFORE, the assailed order is hereby SET ASIDE and the case REMANDED to the NLRC for
a determination of the amount of backwages to be paid to the complainant with instructions to
receive or require such further evidence as may be necessary.

SO ORDERED.
G.R. No. 101427 November 8, 1993

CONSUELO B. KUNTING, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION (Fifth Division), CAGAYAN DE ORO CITY,
ST. JOSEPH SCHOOL, FR. ALOYSIUS CHANG and/or JOSEFINA MANUEL, respondents.

Quasha, Asperilla, Ancheta, Peña & Nolasco for petitioner.

Castillo & Castillo Law Offices for private respondents.

BIDIN, J.:

This special civil action for certiorari seeks to set aside the decision promulgated on October 20,
1989 by the respondent National Labor Commission (NLRC) which modified the decision dated
March 1, 1989 of the Executive Labor Arbiter declaring illegal petitioner Consuelo B. Kunting's
dismissal from employment and ordering respondent St. Joseph School to pay her backwages
equivalent to six months' pay, separation pay, emergency cost of living allowance differentials, 13th
month pay and service incentive leave pay.

In 1969, Consuelo B. Kunting was employed as a teacher by respondent St. Joseph School in Gov.
Camins Avenue, Zamboanga City. She was paid a basic pay and emergency cost of living allowance
(ECOLA) except during summer period when she was paid only the basic pay. Effective January,
1988, her monthly salary was One Thousand Eight Hundred and Twenty Pesos (P1,820.00)
including ECOLA integrated into the basic wage. She was also paid the 13th month pay up to 1987
but not her service incentive leave pay (Rollo, p. 30).

Every year from 1969 until, the school year 1987-1988, Consuelo and St. Joseph executed a
Teacher's Contract. For the school year 1987-1988, her performance rating was very satisfactory
(Rollo, pp. 45-47). In spite of this, St. Joseph School did not renew her employment contract for the
school year 1988-89, thereby terminating her employment with the school. The termination letter
dated April 4, 1988 reads:

Your teaching contract with this school has already expired at the close of this school
year 1987-1988.

We regret to inform you that the administration is not renewing your contract this
coming school year 1988-1989. This notice is served upon you so that you will have
time to look for another employment or to give you full time in your business. (Ibid, p.
4).

On April 14, 1988 (Ibid, p. 31), Consuelo filed a complaint against the St. Joseph School, its Director,
Fr. Aloysius Chang, and Principal, Sister Josephine Manuel, for illegal dismissal, reinstatement and
backwages, wage differentials, 13th month pay, emergency cost of living allowance (ECOLA) and
service incentive leave pay.

With only position and supporting documents submitted by the parties as basis, Executive Labor
Arbiter Rhett Julius J. Plagata rendered the decision of March 1, 1989 declaring that Consuelo was
illegally dismissed. The dispositive portion of the decision states:
 WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered
in the above-entitled case:

(1) declaring the dismissal of Consuelo B. Kunting to be illegal, and ordering St.
Joseph School to pay her backwages in the sum of TEN THOUSAND NINE
HUNDRED TWENTY PESOS (P10,920.00) and separation pay in the sum of
FOURTEEN THOUSAND FIVE HUNDRED SIXTY PESOS (P14,560.00); (2) Further
ordering St. Joseph School to pay Consuelo B. Kunting emergency cost of living
allowance differentials in the sum of FOUR HUNDRED FIFTY FIVE PESOS
(P455.00); and service incentive leave pay, in the sum of SEVEN HUNDRED SIX &
45/100 PESOS (P706.45); and (3) Dismissing the complainant's claim for wage
differentials, for lack of merit.

SO ORDERED.

Dissatisfied, petitioner appealed to the respondent NLRC. She prayed that the Executive Labor
Arbiter's decision be modified so as to include her re-instatement to her former position without loss
of seniority rights with option to accept separation benefits and payment of full backwages from April
4, 1988 up to the actual date of re-instatement, the 13th month pay to cover the period between April
4, 1988 and her actual reinstatement, and moral damages of P25,000.00 plus attorney's fees.

In its decision, the NLRC affirmed the finding of the Executive Labor Arbiter that Consuelo was
illegally dismissed on the ground that the twin requirements of notice and hearing, which constitute
essential elements of due process in cases of dismissal of employees, were not complied with.
Inasmuch as Consuelo was a regular employee under Art. 280 of the Labor Code, the NLRC opined
that her employment for more than sixteen (16) years could not be terminated by the school on the
pretext that her "teaching Contract" had expired.

Notwithstanding its findings of illegal dismissal, the NLRC nonetheless sustained the Executive
Labor Arbiter's ruling as regards the payment of separation pay in lieu of reinstatement due to the
alleged "strained relations" between the parties which existed as a result of the illegal dismissal, and
the alleged failure of Consuelo to refute the accusations leveled against her by her employer.
However, the NLRC modified the grant of six (6) months backwages and ordered instead the
payment of backwages without qualification and deduction, computed from the date of promulgation
of its decision, i.e. October 20, 1989. It further ordered that petitioner's length of service be reckoned
from 1969 up to the promulgation of its decision.

The NLRC further upheld the Executive Labor Arbiter's decision with respect to the payment of the
13th month pay and service incentive pay and the disallowance of claim for wage differentials.
However, the NLRC, like the Executive Labor Arbiter, denied Consuelo's claims for moral damages
and attorney's fees on the ground that although they were set out in her position paper, they had not
been alleged in the complaint.

Consuelo moved for the reconsideration of the above decision but the same was denied.
Dissatisfied, she filed the instant petition.

In this petition, petitioner contends that respondent NLRC committed grave abuse of discretion
amounting to lack of jurisdiction in: (a) awarding separation pay in lieu of reinstatement after a "clear"
finding of illegal dismissal; (b) failing to award full backwages from the time of her dismissal until
actual reinstatement; (c) denying her claim for moral damages and attorney's fees, and (d) failing to
award 13th month pay for school year 1988-1989.
Before considering the merits of the substantive issues raised in this petition, private respondents'
contention that the instant petition for certiorari is not the proper remedy since the NLRC did not
commit grave abuse of discretion and that only questions of facts are involved in this case. (Ibid, p.
79), should be dealt with first.

Petitioner did not err in filing the instant petition. In Pearl S. Buck Foundation v. NLRC, 182 SCRA
446 [1990], the Court held that the only way it can review the decision of the NLRC is by way of
petition for certiorari under Rule 65 of the Rules of Court. * While factual findings of the NLRC are accorded not only
respect but also finality if supported by substantial evidence (Reyes & Lim Co., Inc. v. NLRC, 201 SCRA 772 [1991]) considering the NLRC's
expertise in their field (Chua v. NLRC, 182 SCRA 353 [1990]; Lopez Sugar Corporation v. FFW, 189 SCRA 179 [1990]), any allegations of
fact may still be considered by this Court but only to determine whether the NLRC had no jurisdiction, gravely abused its discretion, violated
due process, denied substantial justice or erroneously interpreted the law (Liberty Flour Mills Employees v. Liberty Flour Mills, Inc., 180
SCRA 689 [1989]). Hence, certiorari is the proper remedy in this case.

We now come to the merits of the issues raised by petitioner. She contends that the NLRC gravely
abused its discretion in ordering the payment of separation pay in lieu of reinstatement
notwithstanding its finding that she had been illegally dismissed. Interrelated with this contention is
her allegation that as a consequence of the NLRC's finding of illegal dismissal, she is entitled to
reinstatement with full backwages from the time of her illegal dismissal on April 4, 1988 up to the
date of actual reinstatement in consonance with Art. 279 of the Labor Code. She argues that under
said provision of the law and the Constitution, her right to security of tenure should be upheld over
and above the perceived "strained relations" between her and private respondents.

On the other hand, public respondent maintains that the right of an unjustly dismissed employee to
reinstatement and backwages under Article 279 of the Labor Code is not without exceptions under
the prevailing jurisprudence. Thus, it is argued, reinstatement may not be ordered when it has
become a legal impossibility or to spare both employer and employee from an atmosphere of
antipathy and antagonism (Galindez v. Rural Bank of Llanera, Inc., 175 SCRA 132 [1989];
Commercial Motors Corporation v. NLRC, 192 SCRA 191 [1990]).

Indeed, an illegally dismissed employee's right to reinstatement is not absolute. The Court has a
long line of decisions concerning non-reinstatement of illegally dismissed employees on various
grounds (Divine Word High School, et al. v. NLRC, et al., 143 SCRA 346 [1986]; Asiaworld
Publishing House, Inc, v. Hon. Blas Ople. 152 SCRA [1987]; Flores v. Nuestro, 160 SCRA 568
[1988]; Galindez v. Rural Bank of Llanera, Inc. supra; Century Textile Mills v. NLRC, 161 SCRA 528
[1988]). One of these grounds is when there is a finding that the relationship between the parties has
become so strained and ruptured as to preclude a harmonious working relationship (Citytrust
Finance Corp. v. NLRC, et al., G.R. 75740, January 15, 1988, 157 SCRA 87; Commercial Motors
Corp. v, NLRC, supra). In the case at bar, however, the peculiar circumstances surrounding the
dismissal of petitioner simply do not show such kind of strained relationship as to warrant the
severance of the working relationship between the parties.

The order to grant petitioner separation pay instead of reinstatement is predicated on the following
finding of strained relations by the Executive Labor Arbiter which was sustained by the NLRC:

. . . . In the instant case, while the manner of dismissal was patently illegal, still
complainant failed to refute the charges or lapses in her conduct as a teacher, i.e.
disrespectful at time, acts of insubordination, non-improvement in her teaching
methods, etc. (Affidavit of Sister Josefina Manuel, O.P., Annex "7" respondent's
position paper, p. 7, Record). As aptly put by the Executive Labor
Arbiter, reinstatement would bring the parties in close or frequent contact in work that
may only serve to further aggravate and inflame the existing animosity and
antagonism between them. (Rollo, p. 26; Emphasis supplied).
As shown by the above-quoted portion of the decision of the NLRC, conclusion on the "strained
relations" between petitioner and private respondents was merely gathered from the latter's evidence
on the former's less than ideal conduct and nothing more. There is no proof that such conduct
actually caused animosity between her and private respondents. Besides, there is no clear showing
that the perceived "strained relations" between the parties is of so serious a nature or of such a
degree as to justify petitioner's dismissal.

"Strained relations," as amplified in Employee's Association of the Philippine American Life

Insurance Company v. NLRC, 199 SCRA 628 [1991], must be of such a nature or degree as to
preclude reinstatement. But, where the differences between the parties are neither personal nor
physical, nor serious, then there is no reason why the illegally dismissed employee should not be
reinstated rather than simply given separation pay and backwages. More so if the cause of the
perceived 'strained relations' is the filing of a complaint for illegal dismissal. As the Court held
in Globe-Mackay Cable and Radio Corporation v. NLRC, 206 SCRA 701 [1992], citing Anscor
Transport and Terminals v. NLRC, 190 SCRA 147 [1990]; Sibal v. Notre Dame of Greater Manila,
182 SCRA 538 [1990]:

Obviously, the principle of "strained relations" cannot be applied indiscriminately.

Otherwise reinstatement can never be possible simply because some hostility is
invariably engendered between the parties as a result of litigation. That is human
nature.

Besides, no strained relations should arise from a valid and legal act of asserting
one's right; otherwise an employee who shall assert his right could be easily
separated from the service, by merely paying his separation pay on the pretext that
his relationship with his employer had already been strained.

Whatever resentments had been harbored by petitioner upon her unceremonious dismissal after
having been employed by St. Joseph School for more than sixteen (16) years is understandable.
Such resentments, however, would not suffice to deny her reemployment because to do so would
render for naught her constitutional right to security of tenure and her corollary right to reinstatement
under Article 279 of the Labor Code. Petitioner is, after all, a permanent teacher as she had
rendered more than three years of satisfactory service (St. Theresita's Academy v. NLRC, 215
SCRA 181 [1992]). Given the fact that her employer is a religious institution, there can be no room
for antagonism between the parties even after the termination of this litigation. Furthermore, this
Court in Tolentino v. NLRC, (152 SCRA 717 [1987]) held:

Security of tenure is a right of paramount value as recognized and guaranteed under

our new constitution. The state shall afford full protection to labor, . . . and promote
full employment and equality of employment opportunities for all. It shall guarantee
the right of all workers to . . . security of tenure. . . . (Sec. 3 Art. XIII on Social Justice
and Human Rights, 1987 Constitution of the Republic of the Philippines.) Such
Constitutional Right should not be denied on mere speculation of any similar unclear
and nebulous basis.

Closely related to the right to reinstatement is the employee's right to receive backwages which
represent the compensation that an unjustly dismissed employee should have received had said
employee not bee dismissed. Petitioner claims that she is entitled to full backwages (computed from
the date of dismissal until actual reinstatement) under Article 279 of the Labor Code. This
contention, however, is not supported by prevailing jurisprudence which limits the award of
backwages to three (3) years without qualification and deduction (Maranaw Hotels and Resorts
Corp. v. Court of Appeals, 215 SCRA 501 [1992], citing Sealand Service, Inc. v. NLRC, 190 SCRA
347 [1990]).

While Republic Act No. 6715 amending Sec. 279, of the Labor Code grants full backwages to
dismissed employees computed from the date of their illegal dismissal up to the date of actual
reinstatement, the same cannot be applied in the case at bar. This is because petitioner was illegally
dismissed on April 4, 1988, or before the effectivity of R.A. 6715 on March 21, 1989.

In Lantion v. NLRC (181 SCRA 513 [1990]), We held that nothing in R.A. 6715 provides for its
retroactive application. Necessarily, awards of backwages in cases of illegal dismissal initiated
before the effectivity of R.A. 6715 will have to be resolved by applying the three-year limit formulated
in the case of Mercury, Drug Co., Inc. v. CIR (56 SCRA 694 [1974]; see Ferrer v. NLRC, G.R. No.
100898, July 5. 1993).

Petitioner's claim for the thirteenth month pay is mandated by Presidential Decree No. 851 which
has been modified by Memorandum Order No. 28 issued by President Corazon C. Aquino on August
13, 1986 so as to remove the salary ceiling of P1,000 of employees entitled. The "Revised
Guidelines on the Implementation of the 13th Month Pay Law" which was issued on November 16,
1987 by then Labor Secretary Franklin M. Drilon, specifically singles out the case of private school
teachers like the petitioner herein. The guidelines state:

(c) Private School Teachers. — Private school teachers, including faculty members
of universities and colleges, are entitled to the required 13th month pay, regardless
of the number of months they teach or are paid within a year, if they have rendered
service for at least one (1) month within a year.

Applying this guideline to the petitioner, she is entitled to a 13th month pay for 1988 as she served
more than three months for that year. Although P.D. No. 851 was conceived "to further protect the
level of real wages from the ravage of world-wide inflation," it would be unfair for the employer to
grant petitioner 13th month pay for the years she had not rendered service. Thus, upon her
reinstatement, payment of the 13th pay should be in accordance with the aforequoted guideline and
that set forth in UST Faculty Union v. NLRC, 190 SCRA 215 [1990]), i.e., it shall not be granted if St.
Joseph School gives its equivalent or when the said employer shall be subjected to "double-burden."

As to the claims for moral damages and attorney's fees, there appears to be no sufficient evidence
thereon as its denial was due to petitioner's failure to aver the same in her complaint, although they
were set out in her position paper. Nonetheless, the Solicitor General correctly supported petitioner's
allegation that rules of procedures should not be applied in a very rigid and technical sense in labor
cases (Rollo., p. 90). This allegation is supported by Art. 221 the Labor Code which provides that the
rules of evidence prevailing in courts of law and equity are not controlling in labor proceedings.

Thus, instead of disregarding petitioner's claims for moral damages and attorney's fees, the
Executive Labor Arbiter should have ascertained the facts alleged by petitioner in her position paper.
The Labor Code is a social legislation intended primarily to promote and protect the rights of the
laborers. Hence, labor officials should use all reasonable means to ascertain the facts in each case
speedily and objectively without regard to technicalities of law or procedure, all in the interest of due
process (211 SCRA 509 [1992], citing Philippine Telegraph and Telephone Corporation v. NLRC,
(183 SCRA 451 [1990]). Thus, by their failure to rule on this particular claims, the Executive Labor
Arbiter and NLRC committed grave abuse of discretion as they failed to avert further delay in the
disposition of this case.
We cannot, however, subscribe to petitioner's assertion that, the issue of damages can be ruled
upon by this Court without the necessity of' remanding the same to public respondent for
determination (Rollo, pp. 101-102). While, it is true that "sound practice seeks to accommodate the
theory which avoids waste of time, effort and expense, to the parties and government, not to speak
of the delay in the disposal of the case"' (De Guzman v. NLRC, G.R. No. 90856, July 23,
1992, citing Fernandez v. Garcia, 92 Phil. 592 [1953]), nevertheless, it is in the best interest of both
parties that the determination of whether or not moral damages and/or attorney's fees should be
awarded, be left to the Executive Labor Arbiter who is in a better position to rule on said issue.

WHEREFORE, the decision of public respondent National Labor Relations Commission is hereby
AFFIRMED with modifications as follows: Private respondent is hereby ordered to reinstate
petitioner Consuelo B. Kunting to her former or equivalent position without loss of seniority rights
with payment of backwages for three (3) years and the13th month pay for 1988. The Executive
Labor Arbiter is likewise ordered to determine with dispatch petitioner's claims for moral damages
and attorney's fees. No costs.

SO ORDERED.
Congson v. NLRC, G.R. No. 114250, April 5, 1995

Doctrine: Form of payment of wages

FACTS:

Private respondents were hired as piece-rate employees of Southern Fishing Industry owned by
petitioner Congson. They were uniformly paid at a rate of P1.00 per tuna weighing thirty (30) to
eighty (80) kilos per movement and worked 7 days a week.

Due to alleged scarcity of tuna, Congson notified the private respondents his proposal to reduce
the rate-per-tuna movement. Private respondents resisted the proposed rate reduction. When
they reported back to work, they found out that they were already replaced with new set of
workers. They wanted to have a dialogue with the management, but they waited in vain.

Private respondents filed a case before NLRC for underpayment of wages (violation of the
minimum wage law) and non-payment of overtime pay, 13th month pay, holiday pay, rest day
pay, and five (5)-day service incentive leave pay; and for constructive dismissal.

Petitioner conceded that his payment of wages falls below the minimum wage law. He averred
that NLRC should have considered as forming a substantial part of private respondents' total
wages the cash value of the tuna liver and intestines private respondents were entitled to
retrieve. He argued that the combined value of the cash wage and monetary value of the tuna
liver and intestines clearly exceeded the minimum wage fixed by law.

Both the Labor Arbiter and the NLRC ruled in favor of the respondents.

ISSUE:

WON the form of payment by Congson is valid pursuant to Article 102 of the Labor Code.

HELD/SC:

Petitioner's practice of paying the private respondents the minimum wage by means of legal
tender combined with tuna liver and intestines runs counter to Article 102 of the Labor Code.
The fact that said method of paying the minimum wage was not only agreed upon by both
parties in the employment agreement but even expressly requested by private respondents,
does not shield petitioner.

Wages shall be paid only by means of legal tender. The only instance when an employer is
permitted to pay wages informs other than legal tender, that is, by checks or money order, is
when the circumstances prescribed in the second paragraph of Article 102 are present.
Acesite Corporation vs. NLRC

Facts:

 Leo A. Gonzales (Gonzales) was a Chief of Security of Acesite Corporation.

 Gonzales took several leaves (sick leave, emergency leave, and vacation leave), thereby using up all
leaves that he was entitled for the year.
 Before the expiration of his 12-day vacation leave, Gonzales filed an application for emergency leave
for 10 days commencing on April 30 up to May 13, 1998.The application was not, however,
approved.
 He received a telegram informing him of the disapproval and asking him to report back for work on
April 30, 1998. However Gonzales did not report for work on the said date.
 On May 5, 1998, Acesite sent him a final telegram in his provincial address containing in order for
Gonzales to report back to work.
 Gonzales, who claims to have received the May 5, 1998 telegram only in the afternoon of May 7, 1998,
immediately repaired back to Manila on May 8, 1998 only to be “humiliatingly and ignominiously
barred by the guard (a subordinate of [Gonzales]) from entering the premises.”
 It appears that on May 7, 1998, the issued notice of termination was thru an inter-office memo.
 Gonzales thus filed on May 27, 1998 a complaint against Acesite for illegal dismissal with prayer for
reinstatement and payment of full backwages, etc.
 Acesite claims, Gonzales “showed no respect for the lawful orders for him to report back to work
and repeatedly ignored all telegrams sent to him,” and it merely exercised its legal right to dismiss
him under the House Code of Discipline.
 LA - the complaint for lack of merit, its holding that Gonzales was dismissed for just cause and was
not denied of due process.
 NLRC - reversed that of the Labor Arbiter.
 CA - finding that Gonzales was illegally dismissed, affirmed with modification the NLRC decision.

Issue:

 WON Gonzales was legally dismissed for just cause.

Held:

 No. there appears to have been no just cause to dismiss Gonzales from employment. As correctly ruled by the
Court of Appeals, Gonzales cannot be considered to have willfully disobeyed his employer. Willful
disobedience entails the concurrence of at least two (2) requisites: the employee’s assailed conduct has been
willful or intentional, the willfulness being characterized by a “wrongful and perverse attitude;” and the order
violated must have been reasonable, lawful, made known to the employee and must pertain to the duties
which he had been engaged to discharge.
 In Gonzales’ case, his assailed conduct has not been shown to have been characterized by a perverse attitude,
hence, the first requisite is wanting. His receipt of the telegram disapproving his application for emergency leave
starting April 30, 1998 has not been shown. And it cannot be said that he disobeyed the May 5, 1998 telegram
since he received it only on May 7, 1998. On the contrary, that he immediately hied back to Manila upon receipt
thereof negates a perverse attitude.
Manila Diamond Hotel Employee Union vs CA
OCTOBER 23, 2012 ~ VBDIAZ

Manila Diamond Hotel Ee Union vs CA

GR 140518
Facts:
The Union filed a petition for a certification election, which was dismissed by the
DOLE. Despite the dismissal of their petition, the Union sent a letter to the Hotel
informing the latter of its desire to negotiate for a collective bargaining
agreement. The Hotel, however, refused to
negotiate with the Union, citing the earlier dismissal of the Union’s petition for
certification by DOLE.

Failing to settle the issue, the Union staged a strike against the Hotel. Numerous
confrontations followed, further straining the relationship between the Union
and the Hotel. The Hotel claims that the strike was illegal and dismissed some
employees for their participation in the allegedly illegal concerted activity. The
Union, on the other hand, accused the Hotel of illegally dismissing the workers.

A Petition for Assumption of Jurisdiction under Article 263(g) of the Labor Code
was later filed by the Union before the Secretary of Labor. Thereafter, Secretary
of Labor Trajano issued an Order directing the striking officers and members of
the Union to return to work within twenty-four (24) hours and the Hotel to
accept them back under the same terms and conditions prevailing prior to the
strike.

After receiving the above order the members of the Union reported for work, but
the Hotel refused to accept them and instead filed a Motion for Reconsideration
of the Secretary’s Order.
Acting on the motion for reconsideration, then Acting Secretary of Labor Español
modified the one earlier issued by Secretary Trajano and instead directed that
the strikers be reinstated only in the payroll.

Issue: WON payroll reinstatement is proper in lieu of actual reinstatement under

Article 263(g)
of the Labor Code.
Held:
Payroll reinstatement in lieu of actual reinstatement is not sanctioned under the
provision of the said article.

The Court noted the difference between UST vs. NLRC and the instant case. In
UST case the teachers could not be given back their academic assignments since
the order of the Secretary for them to return to work was given in the middle of
the first semester of the academic year.
The NLRC was, therefore, faced with a situation where the striking teachers were
entitled to a return to work order, but the university could not immediately
reinstate them since it would be impracticable and detrimental to the students to
change teachers at that point in time.

In the present case, there is no similar compelling reason that called for payroll
reinstatement as an alternative remedy. A strained relationship between the
striking employees and management is no reason for payroll reinstatement in
lieu of actual reinstatement.

Under Article 263(g), all workers must immediately return to work and all
employers must readmit all of them under the same terms and conditions
prevailing before the strike or lockout.

The Court pointed out that the law uses the precise phrase of “under the same
terms and conditions,” revealing that it contemplates only actual reinstatement.
This is in keeping with the rationale that any work stoppage or slowdown in that
particular industry can be inimical to the
national economy.

The Court reiterates that Article 263(g) was not written to protect labor from the
excesses of management, nor was it written to ease management from expenses,
which it normally incurs during a work stoppage or slowdown. This law was
written as a means to be used by the State to
protect itself from an emergency or crisis. It is not for labor, nor is it for
management.

Petition granted.
G.R. No. 152329 April 22, 2003

ALEJANDRO ROQUERO, petitioner,

vs.
PHILIPPINE AIRLINES, INC., respondent.

PUNO, J.:

Brought up on this Petition for Review is the decision of the Court of Appeals dismissing Alejandro
Roquero as an employee of the respondent Philippine Airlines, Inc.

Roquero, along with Rene Pabayo, were ground equipment mechanics of respondent Philippine
Airlines, Inc. (PAL for brevity). From the evidence on record, it appears that Roquero and Pabayo
were caught red-handed possessing and using Methampethamine Hydrochloride or shabu in a raid
conducted by PAL security officers and NARCOM personnel.

The two alleged that they did not voluntarily indulge in the said act but were instigated by a certain
Jojie Alipato who was introduced to them by Joseph Ocul, Manager of the Airport Maintenance
Division of PAL. Pabayo alleged that Alipato often bragged about the drugs he could smuggle inside
the company premises and invited other employees to take the prohibited drugs. Alipato was
unsuccessful, until one day, he was able to persuade Pabayo to join him in taking the drugs. They
met Roquero along the way and he agreed to join them. Inside the company premises, they locked
the door and Alipato lost no time in preparing the drugs to be used. When they started the procedure
of taking the drugs, armed men entered the room, arrested Roquero and Pabayo and seized the
drugs and the paraphernalia used.1 Roquero and Pabayo were subjected to a physical examination
where the results showed that they were positive of drugs. They were also brought to the security
office of PAL where they executed written confessions without the benefit of counsel.2

On March 30, 1994, Roquero and Pabayo received a "notice of administrative charge"3 for violating
the PAL Code of Discipline. They were required to answer the charges and were placed under
preventive suspension.

Roquero and Pabayo, in their "reply to notice of administrative charge,"4 assailed their arrest and
asserted that they were instigated by PAL to take the drugs. They argued that Alipato was not really
a trainee of PAL but was placed in the premises to instigate the commission of the crime. They
based their argument on the fact that Alipato was not arrested. Moreover, Alipato has no record of
employment with PAL.

In a Memorandum dated July 14, 1994, Roquero and Pabayo were dismissed by PAL.5 Thus, they
filed a case for illegal dismissal.6

In the Labor Arbiter's decision, the dismissal of Roquero and Pabayo was upheld. The Labor Arbiter
found both parties at fault — PAL for applying means to entice the complainants into committing the
infraction and the complainants for giving in to the temptation and eventually indulging in the
prohibited activity. Nonetheless, the Labor Arbiter awarded separation pay and attorney's fees to the
complainants.7

While the case was on appeal with the National Labor Relations Commission (NLRC), the
complainants were acquitted by the Regional Trial Court (RTC) Branch 114, Pasay City, in the
criminal case which charged them with "conspiracy for possession and use of a regulated drug in
violation of Section 16, Article III of Republic Act 6425," on the ground of instigation.
The NLRC ruled in favor of complainants as it likewise found PAL guilty of instigation. It ordered
reinstatement to their former positions but without backwages.8 Complainants did not appeal from
the decision but filed a motion for a writ of execution of the order of reinstatement. The Labor Arbiter
granted the motion but PAL refused to execute the said order on the ground that they have filed a
Petition for Review before this Court.9 In accordance with the case of St. Martin Funeral Home vs.
NLRC and Bienvenido Aricayos,10 PAL's petition was referred to the Court of Appeals.11

During the pendency of the case with the Court of Appeals, PAL, and Pabayo filed a Motion to
Withdraw/Dismiss the case with respect to Pabayo, after they voluntarily entered into a compromise
agreement.12 The motion was granted in a Resolution promulgated by the Former Thirteenth Division
of the Court of Appeals on January 29, 2002.13

The Court of Appeals later reversed the decision of the NLRC and reinstated the decision of the
Labor Arbiter insofar as it upheld the dismissal of Roquero. However, it denied the award of
separation pay and attorney's fees to Roquero on the ground that one who has been validly
dismissed is not entitled to those benefits.14

The motion for reconsideration by Roquero was denied. In this Petition for Review on Certiorari
under Rule 45, he raises the following issues:

1. Whether or not the instigated employee shall be solely responsible for an action arising
from the instigation perpetrated by the employer;

2. Can the executory nature of the decision, more so the reinstatement aspect of a labor
tribunal's order be halted by a petition having been filed in higher courts without any
restraining order or preliminary injunction having been ordered in the meantime?

3. Would the employer who refused to reinstate an employee despite a writ duly issued be
held liable to pay the salary of the subject employee from the time that he was ordered
reinstated up to the time that the reversed decision was handed down?15

There is no question that petitioner Roquero is guilty of serious misconduct for possessing and using
shabu. He violated Chapter 2, Article VII, section 4 of the PAL Code of Discipline which states:

"Any employee who, while on company premises or on duty, takes or is under the influence
of prohibited or controlled drugs, or hallucinogenic substances or narcotics shall be
dismissed."16

Serious misconduct is defined as "the transgression of some established and definite rule of action,
a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere
error in judgment."17 For serious misconduct to warrant the dismissal of an employee, it (1) must be
serious; (2) must relate to the performance of the employee's duty; and (3) must show that the
employee has become unit to continue working for the employer.18

It is of public knowledge that drugs can damage the mental faculties of the user. Roquero was
tasked with the repair and maintenance of PAL's airplanes. He cannot discharge that duty if he is a
drug user. His failure to do his job can mean great loss of lives and properties. Hence, even if he
was instigated to take drugs he has no right to be reinstated to his position. He took the drugs fully
knowing that he was on duty and more so that it is prohibited by company rules. Instigation is only a
defense against criminal liability. It cannot be used as a shield against dismissal from employment
especially when the position involves the safety of human lives.

Petitioner cannot complain he was denied procedural due process. PAL complied with the twin-
notice requirement before dismissing the petitioner. The twin-notice rule requires (1) the notice which
apprises the employee of the particular acts or omissions for which his dismissal is being sought
along with the opportunity for the employee to air his side, and (2) the subsequent notice of the
employer's decision to dismiss him.19 Both were given by respondent PAL.

II

Article 223 (3rd paragraph) of the Labor Code20 as amended by Section 12 of Republic Act No.
6715,21 and Section 2 of the NLRC Interim Rules on Appeals under RA No. 6715, Amending the
Labor Code,22 provide that an order of reinstatement by the Labor Arbiter is immediately executory
even pending appeal. The rationale of the law has been explained in Aris (Phil.) Inc. vs. NLRC:23

"In authorizing execution pending appeal of the reinstatement aspect of a decision of the
Labor Arbiter reinstating a dismissed or separated employee, the law itself has laid down a
compassionate policy which, once more, vivifies and enhances the provisions of the 1987
Constitution on labor and the working man.

xxx xxx xxx

These duties and responsibilities of the State are imposed not so much to express sympathy
for the workingman as to forcefully and meaningfully underscore labor as a primary social
and economic force, which the Constitution also expressly affirms with equal intensity. Labor
is an indispensable partner for the nation's progress and stability.

xxx xxx xxx

. . . In short, with respect to decisions reinstating employees, the law itself has determined a
sufficiently overwhelming reason for its execution pending appeal.

xxx xxx xxx

. . . Then, by and pursuant to the same power (police power), the State may authorize an
immediate implementation, pending appeal, of a decision reinstating a dismissed or
separated employee since that saving act is designed to stop, although temporarily since the
appeal may be decided in favor of the appellant, a continuing threat or danger to the survival
or even the life of the dismissed or separated employee and his family."

The order of reinstatement is immediately executory. The unjustified refusal of the employer to
reinstate a dismissed employee entitles him to payment of his salaries effective from the time the
employer failed to reinstate him despite the issuance of a writ of execution.24 Unless there is a
restraining order issued, it is ministerial upon the Labor Arbiter to implement the order of
reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on PAL
to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL must pay
Roquero the salary he is entitled to, as if he was reinstated, from the time of the decision of the
NLRC until the finality of the decision of this Court.
We reiterate the rule that technicalities have no room in labor cases where the Rules of Court are
applied only in a suppletory manner and only to effectuate the objectives of the Labor Code and not
to defeat them.25 Hence, even if the order of reinstatement of the Labor Arbiter is reversed on
appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed
employee during the period of appeal until reversal by the higher court. On the other hand, if the
employee has been reinstated during the appeal period and such reinstatement order is reversed
with finality, the employee is not required to reimburse whatever salary he received for he is entitled
to such, more so if he actually rendered services during the period.

IN VIEW WHEREOF, the dismissal of petitioner Roquero is AFFIRMED, but respondent PAL is
ordered to pay the wages to which Roquero is entitled from the time the reinstatement order was
issued until the finality of this decision.

SO ORDERED.
Genuino vs NLRC
Facts:
Genuino was employed by Citibank sometime in January 1992 as Treasury Sales Division Head with the
rank of Assistant Vice-President. She received a monthly compensation of PhP 60,487.96, exclusive of
benefits and privileges. On August 23, 1993, Citibank sent Genuino a letter charging her with “knowledge
and/or involvement” in transactions “which were irregular or even fraudulent.” In the same letter, Genuino
was informed she was under preventive suspension. Genuino’s counsel replied through a letter dated
September 17, 1993, demanding for a bill of particulars regarding the charges against Genuino.

On September 27, 1993, Citibank informed Genuino of the result of their investigation. It found that
Genuino with Santos used “facilities of Genuino’s family corporation, namely, Global Pacific, personally
and actively participated in the diversion of bank clients’ funds to products of other companies that yielded
interests higher than what Citibank products offered, and that Genuino and Santos realized substantial
financial gains, all in violation of existing company policy and the Corporation Code, which for your
information, carries a penal sanction.”

Genuino’s employment was terminated by Citibank on grounds of (1) serious misconduct, (2) willful breach
of the trust reposed upon her by the bank, and (3) commission of a crime against the bank

Labor Arbiter - the dismissal of the complainant Marilou S. Genuino to be without just cause and in
violation of her right to due process,

NLRC- reversed the Labor Arbiter’s decision CA- with just cause but w/o due process P5,000.00 nominal
charges

Issue:
Whether the dismissal is for a just cause and with the observance of due process.

Held:
Genuino was dismissed for just cause but without the observance of due process. he Labor Arbiter found
that Citibank failed to adequately notify Genuino of the charges against her. On the contrary, the NLRC
held that “the function of a ‘notice to explain’ is only to state the basic facts of the employer’s charges

In Agabon, we explained:
The violation of the petitioners’ right to statutory due process by the private respondent warrants the
payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the
sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing
circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages
would serve to deter employers from future violations of the statutory due process rights of employees. At
the very least, it provides a vindication or recognition of this fundamental right granted to the latter under
the Labor Code and its Implementing Rules. Thus, the award of PhP 5,000 to Genuino as indemnity for
non-observance of due process under the CA’s March 31, 2000Resolution in CA-G.R. SP No. 51532 is
increased to PhP 30,000.
JUANITO A. GARCIA v. PHILIPPINE AIRLINES, GR NO. 164856, 2007-08-29
Facts:
Petitioners Alberto J. Dumago and Juanito A. Garcia were employed by respondent
Philippine Airlines, Inc. (PAL) as Aircraft Furnishers Master "C" and Aircraft Inspector,
respectively.
On July 24, 1995, a combined team of the PAL Security and National Bureau of
Investigation (NBI) Narcotics Operatives raided the Toolroom Section - Plant Equipment
Maintenance Division (PEMD) of the PAL Technical Center. They found petitioners, with
four others, near the said... section at that time. When the PAL Security searched the
section, they found shabu paraphernalia inside the company-issued locker of Ronaldo
Broas who was also within the vicinity. The six employees were later brought to the NBI for
booking and proper investigation.
On July 26, 1995, a Notice of Administrative Charge[4] was served on petitioners. They
were allegedly "caught in the act of sniffing shabu inside the Toolroom Section," then placed
under preventive suspension
Petitioners vehemently denied the allegations and challenged PAL to show proof that they
were indeed "caught in the act of sniffing shabu." Dumago claimed that he was in the
Toolroom Section to request for an allen wrench to fix the needles of the sewing and
zigzagger machines.
Garcia averred he was in the Toolroom Section to inquire where he could take the
Trackster's tire for vulcanizing.
On October 9, 1995, petitioners were dismissed
Both simultaneously filed... a case for illegal dismissal and damages.
In the meantime, the Securities and Exchange Commission (SEC) placed PAL under an
Interim Rehabilitation Receiver due to severe financial losses.
On January 11, 1999, the Labor Arbiter rendered a decision[6] in petitioners' favor
Meanwhile, the SEC replaced the Interim Rehabilitation Receiver with a Permanent
Rehabilitation Receiver.
On appeal, the NLRC reversed the Labor Arbiter's decision and dismissed the case for lack
of merit.
On October 5, 2000, the Labor Arbiter issued a Writ of Execution[10] commanding the
sheriff to proceed:
To the Office of respondent... and cause reinstatement of complainants to their former
position and to cause the collection of the amount of [P]549,309.60 from respondent PAL...
representing the backwages of said complainants on the reinstatement aspect;
In case you cannot collect from respondent PAL for any reason, you shall levy on the office
equipment and other movables and garnish its deposits with any bank in the Philippines
Although PAL filed an Urgent Motion to Quash Writ of Execution, the Labor Arbiter issued a
Notice of Garnishment[12] addressed to the President/Manager of the Allied Bank Head
Office in Makati City for the amount of P549,309.60.
PAL moved to lift the Notice of Garnishment while petitioners moved for the release of the
garnished amount.
the NLRC resolved as follows:
WHEREFORE, premises considered, the Petition is partially GRANTED. Accordingly, the
Writ of Execution dated October 5, 2000 and related [N]otice of Garnishment [dated
October 25, 2000] are DECLARED valid. However, the instant action is SUSPENDED and
REFERRED to the
Receiver of Petitioner PAL for appropriate action.
PAL appealed to the Court of Appeals
The appellate court ruled that the Labor Arbiter issued the writ of execution and the notice
of garnishment without jurisdiction. Hence, the NLRC erred in upholding its validity. Since
PAL was under receivership, it could not have possibly reinstated petitioners due to...
retrenchment and cash-flow constraints. The appellate court declared that a stay of
execution may be warranted by the fact that PAL was under rehabilitation receivership.
Issues:
(1) Are petitioners entitled to their wages during the pendency of PAL's appeal to the
NLRC? and (2) In the light of new developments concerning PAL's rehabilitation, are
petitioners entitled to execution of... the Labor Arbiter's order of reinstatement even if PAL is
under receivership?
Ruling:
We note that during the pendency of this case, PAL was placed by the SEC first, under an
Interim Rehabilitation Receiver and finally, under a Permanent Rehabilitation Receiver.
Worth stressing, upon appointment by the SEC of a rehabilitation receiver, all actions for
claims against the corporation pending before any court, tribunal or board shall ipso jure be
suspended.
More importantly, the suspension of all actions for claims against the corporation embraces
all phases of the suit, be it before the trial court or any tribunal or before this Court.
Furthermore, the actions that are suspended cover all claims against the corporation
whether for damages founded on a breach of contract of carriage, labor cases, collection
suits or any other claims of a pecuniary nature.
Since petitioners' claim against PAL is a money claim for their wages during the pendency
of PAL's appeal to the NLRC, the same should have been suspended pending the
rehabilitation proceedings. The Labor Arbiter, the NLRC, as well as the Court of Appeals
should have abstained... from resolving petitioners' case for illegal dismissal and should
instead have directed them to lodge their claim before PAL's receiver.
ALFREDO F. PRIMERO vs. INTERMEDIATE APPELLATE COU
RT and DM TRANSIT G.R. No. 72644, December 14, 1987
FACTS:

Primero was discharged from his employment as bus driver of DM Transit Corporation.
Primero instituted proceedings against DM with the Labor Arbiters of the Department o
f Labor, for illegal dismissal. Labor Arbiter ruled in favour of Primero and ordered the e
mployer to give separation pay. After, Primero brought suit against DM in the Court of F
irst Instance of Rizal seeking recovery of damages caused not only by the breach of his e
mployment contract, but also by the oppressive and inhuman, and consequently tortious
, acts of his employer and its officers antecedent and subsequent to his dismissal from e
mployment without just cause.

While this action was pending, Labor Arbiters’ jurisdiction was once again revised. It res
tored the principle that “exclusive and original jurisdiction for damages would once agai
n be vested in labor arbiters. In effect, Trial Court rendered dismissed the complaint on t
he ground of lack of jurisdiction.

ISSUE:

Whether or not there can be splitting of cause of cause of action in a labor case.

HELD:

No, splitting of cause of action is not allowed in labor case. An employee who has been il
legally dismissed, in such a manner as to cause him to suffer moral damages has a cause
of action for reinstatement and recovery of back wages and damages. When he institutes
proceedings before the Labor Arbiter, he should make a claim for all said reliefs. He can
not, to be sure, be permitted to prosecute his claims piecemeal. He cannot institute proc
eedings separately and contemporaneously in a court of justice upon the same cause of a
ction or a part thereof. He cannot and should not be allowed to sue in two forums: one, b
efore the Labor Arbiter for reinstatement and recovery of back wages, or for separation
pay, upon the theory that his dismissal was illegal; and two, before a court of justice for r
ecovery of moral and other damages, upon the theory that the manner of his dismissal w
as unduly injurious, or tortious.

Consequently, the judgment of the Labor Arbiter granting Primero separation pay opera
ted as a bar to his subsequent action for the recovery of damages before the Court of Firs
t Instance under the doctrine of res judicata.
267 Phil. 816

MEDIALDEA, J.:
These petitions for certiorari seek the review of the decision of respondent National
Labor Relations Commission promulgated on April 30, 1987 in NLRC Case No. NCR-11-
3887-84. Both parties filed their petitions with this Court which were consolidated on
motion of Jesus T. Maglutac and Commart (Phils.), Inc. and by resolution of this Court
dated August 12, 1987 (p. 74, Rollo of G.R. No. 78345).
Jose M. Maglutac, petitioner in G.R. No. 78345 hereinafter referred to as complainant)
was employed by Commart (Phils.), Inc. (hereinafter referred to as Commart) sometime
in February, 1980 and rose to become the Manager of its Energy Equipment Sales. On
October 3, 1984, he received a notice of termination signed by Joaquin S. Cenzon, Vice-
President - General Manager and Corporate Secretary of CMS International, a
corporation controlled by Commart. The notice of termination reads:
"You are hereby notified and advised that the Board of Directors of this Corporation,
acting on the unanimous resolution, have decided that your continued employment in
this company, will not be in the best interest of the corporation.
"You are therefore discharged of all your duties and responsibilities as Manager, Energy
Equipment Sales effective immediately.
"The termination of your services is without prejudice to any future action, private or
legal, that the Company may take to demand restitution, enforce collection or require
repayment of whatever financial obligations you now have incurred, to the company. (p.
50, Rollo)
Thereafter, Jose Maglutac filed a complaint for illegal dismissal against Commart and
Jesus T. Maglutac, President and Chairman of the Board of Directors of Commart. The
complainant alleged that his dismissal was part of a vendetta drive against his parents
who dared to expose the massive and fraudulent diversion of company funds to the
company president's private accounts, stressing that complainant's efficiency and
effectiveness were never put to question when very suddenly he received his notice of
termination (p. 51, Rollo).
Commart and Jesus T. Maglutac, on the other hand, justified the dismissal for lack of
trust and confidence brought about by complainant and his family's establishment of a
company, MM International, in direct competition with Commart.
After the parties submitted their respective position papers, the Labor Arbiter assigned
to the case, Jose Collado, Jr., rendered a decision on January 11, 1986 finding that
complainant was illegally dismissed. The dispositive portion of the decision reads:
"WHEREFORE, respondents are hereby ordered to reinstate complainant to his former
position with full backwages without loss of seniority rights and other personnel (sic)
privileges, to pay complainant jointly and severally P200,000.00 in moral damages,
P20,000.00 in exemplary damages and to pay ten percent (10%) attorney's fees.
"SO ORDERED." (p. 57, Rollo)
Commart and Jesus T. Maglutac filed a motion for reconsideration of the decision of the
Labor Arbiter which was treated as an appeal to the National Labor Relations
Commission (NLRC). On April 30, 1987, a decision was rendered by the NLRC
modifying the decision of the Labor Arbiter. The NLRC affirmed the finding of the
Labor Arbiter that complainant was illegally dismissed by Commart but it deleted the
award for moral and exemplary damages in favor of complainant and absolved Jesus
T. Maglutac from any personal liability to the complainant. The pertinent portion of the
decision reads:
"x x x.
"We agree however, to the contention of individual respondent that he should not have
been held liable in solidum with the corporation. He is merely a nominal party to the
case and made so only in his capacity as President and Chairman of the Board of
Directors of the respondent corporation. The respondent corporation has a separate
and distinct personality from that of its stockholders and its officers, and respondent
Jesus T. Maglutac simply cannot be held personally liable for his corporate acts.
"Finally, we delete the award of moral and exemplary damages to complainant for lack
of factual and legal basis.
"WHEREFORE, as above modified, the appealed decision is hereby Affirmed and the
appeal dismissed for lack of merit.
"SO ORDERED." (pp. 44-45, Rollo)
Both parties filed their respective motions for reconsideration of the decision of the
NLRC. Commart and Jesus T. Maglutac questioned the NLRC's finding that the
complainant was dismissed without just cause. For his part, complainant questioned
the decision insofar as it deleted the award of moral and exemplary damages and the
non-holding of a joint and several liability of Jesus
T. Maglutac and Commart. Complainant's motion was denied on June 5, 1987 (p.
46, Rollo in G.R. No. 78345). Commart and Jesus T. Maglutac's motion for
reconsideration was also denied on May 29, 1987 (p. 25, Rollo in G.R. No.
78637). Hence, the instant petitions both alleging grave abuse of discretion on the part
of respondent NLRC.
In G.R. No. 78345, complainant Jose M. Maglutac raised the following grounds:
"(1) RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY
ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION
AND EVEN CONTRAVENED EXISTING LAWS AND JURISPRUDENCE IN HOLDING
THAT THERE IS NO FACTUAL OR LEGAL BASIS FOR THE AWARD OF MORAL AND
EXEMPLARY DAMAGES.
"(2) RESPONDENT NATIONAL LABOR RELATIONS COMMISSION COMMITTED
GRAVE ABUSE OF DISCRETION AND CONTRAVENED EXISTING LAWS AND
JURISPRUDENCE IN HOLDING THAT RESPONDENT JESUS T. MAGLUTAC
SHOULD NOT HAVE BEEN HELD LIABLE IN SOLIDUM WITH THE RESPONDENT
CORPORATION FOR HE IS MERELY A NOMINAL PARTY TO THE CASE AND MADE
SO ONLY IN HIS CAPACITY AS PRESIDENT AND CHAIRMAN OF THE BOARD OF
DIRECTORS OF RESPONDENT CORPORATION, AND SIMPLY CANNOT BE HELD
LIABLE FOR HIS CORPORATE ACT." (p. 30, Rollo)
In G.R. No. 78637, Commart and Jesus Maglutac raised the following grounds:
"(I) RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN
ORDERING THE REINSTATEMENT OF PRIVATE RESPONDENT PLUS PAYMENT
OF BACKWAGES DESPITE CLEAR PROOF THAT SAID RESPONDENT COMMITTED
AN ACT INIMICAL TO PETITIONER'S INTEREST.
"(II) RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN
SUSTAINING THE ARBITER'S DECISION WHICH WAS ISSUED IN VIOLATION OF
DUE PROCESS OF LAW." (p. 8, Rollo)
On August 29, 1988, Commart filed a manifestation stating that it had become insolvent
and that it had suspended operations since January, 1986 (p. 172-A, Rollo).
In G.R. No. 78345, complainant argued that because of the Labor Arbiter and
the NLRC's findings that is dismissal was not merely without just cause but was also an
act of vendetta, malice attended the act. Consequently, he is entitled to moral and
exemplary damages under the Civil Code.
We agree. In the case of Primero v. Intermediate Appellate Court, G.R. No. 72644,
December 14, 1987, 156 SCRA 435, We held that in cases of illegal dismissal, in addition
to the reliefs granted under the Labor Code, other forms of damages under the Civil
Code may be granted. Thus,
"The legislative intent appears clear to allow recovery in proceedings before Labor
Arbiters of moral and other forms of damages, in all cases or matters arising from
employer-employee relations. This would no doubt include, particularly, instances
where an employee has been unlawfully dismissed. In such a case, the Labor Arbiter has
jurisdiction to award to the dismissed employee not only the reliefs specifically provided
by labor laws, but also moral and other forms of damages governed by the Civil
Code. Moral damages would be recoverable, for
example, where the dismissal of the employee was not only effected without authorized c
ause and/or due process - for which relief is granted by the Labor Code
- but was attended by bad faith or fraud, or constituted an act oppressive to labor, or was
done in a manner contrary to morals, good customs or public policy - for which the obta
inable relief determined by the Civil Code (not the Labor Code). Stated otherwise, if the
evidence adduced by the employee before the Labor Arbiter should establish that the
employer did indeed terminate the employee's services without just cause or without
according him due process, the Labor arbiter's judgment shall be for the employer to
reinstate the employee and pay him his backwages or, exceptionally, for the employee
simply to receive separation pay. These are reliefs explicitly prescribed by the Labor
Code. But any award of moral damages by the Labor Arbiter obviously cannot be based
on the Labor Code but should be grounded on the Civil Code".
"Moral damages may be awarded to compensate one for diverse injuries such as mental
anguish, besmirched reputation, wounded feelings and social humiliation. It is however
not enough that such injuries have arisen; it is essential that they have sprung from a
wrongful act or omission of the defendant which was the proximate cause thereof."
(Guita v. Court of Appeals, 139 SCRA 576)
From the findings of the Labor Arbiter as affirmed by the NLRC, there is sufficient basis
for an award of moral and exemplary damages in the instant case. The alleged loss of
trust and confidence on complainant because of his family's establishment of MM
International, a company allegedly in direct competition with Commart, was belied by
the findings of the Labor Arbiter:
"The formation of another corporation by complainant's parents including the
complainant himself cannot be used to justify the termination of complainant. The
formation came about before complainant's parents brought a minority stockholders'
derivative suit and in fact, this was with the sanction of respondent company's
president. The following handwritten communications by respondent
Jesus Maglutac show that he even encouraged the organization of MM International
Inc. which Articles of Incorporation show complainant among the incorporating
directors." (p. 32, Rollo)
Moreover, the complainant was dismissed without due process. His dismissal was made
effective immediately and he was not given an opportunity to present his side. As found
by the Labor Arbiter:
"After studying in depth the facts and the evidence it is difficult to divert from the fact
that the dismissal of complainant was triggered by his parent's filing a derivative suit
against respondents with the Securities and Exchange Commission where it is alleged
that the company's president and his wife siphoned company funds to their private bank
accounts. Complainant's cause of termination cannot easily and simply be detached
from the filing of the minority stockholders' derivative suit as this dismissal came
abruptly shortly after the derivative suit was filed. Complainant's brother who was
likewise employed by respondents was likewise dismissed and this came on the heels of
the suit filed with the Securities and Exchange Commission.
"The sequence of events should not be overlooked. It provides the link for the dismissal
of complainant and his brother. Worse, the requirement of due process was blatantly
violated. His notice of termination dated October 3, 1984 ipso facto states that his
dismissal is effective immediately. It should have dawned upon the senses of
respondents that BP 130 strictly enjoins an employer to terminate an employee provided
the latter is given the opportunity to answer charges imputed against him as basis for
disciplinary action. The case at bar prominently reveals respondent's oversight of the
requirements of the law. On this score alone, the illegality of complainant's dismissal is
bared eloquently more than ever.
"It appears very clearly that the feud between complainant's parents and respondent's
president, the brother of complainant's father, seethed to an intolerable point not
sparing innocent people among whom is the complainant. Like a wild fire spreading its
path, complainant's close kins were sacked from their employ with respondent
corporation in what is termed by complainant as a 'vendetta drive.' But blood spawned
as a result of the derivative suit filed by complainant's parents, although the suit is,
legally speaking, intended to 'protect and safeguard the company's interest from further
depredation.'" (pp. 31-32, Rollo)
Where the employee's dismissal was effected without procedural fairness, an award of
exemplary damages in her favor can only be justified if her dismissal was affected in a
wanton, oppressive or malevolent manner (National Service Corp., et al. v. NLRC, G.R.
No. 69870, Nov. 29, 1988). The Labor Arbiter justified the award of moral damages
from its finding of the oppressive and malevolent manner the complainant and his
relatives were treated after Jesus T. Maglutac found out that a derivative suit was filed
by complainant's family with the Securities and Exchange Commission accusing him
and his wife of diverting corporation assets to their personal accounts. The Labor
Arbiter justified the award of damages, thus:
"Complainant undoubtedly was exposed to undue humiliation as a result of his
dismissal. From the taunts and sleepless nights he suffered, the pain cannot be more
than imagined. The oppressive and malevolent treatment which respondents subjected
him to, including the ill-concealed attempt to deprive him of his rights to the car that he
had acquired through the company's car plan, not to mention the vindictive manner in
which his mother was removed as a director and his brother dismissed from CMS
International, furnishes adequate basis for the claim for moral and exemplary
damages." (pp. 35-36, Rollo)
We agree however, with the contention of the Solicitor General that the award by the
Labor Arbiter of P200,000.00 moral damages and P20,000.00 exemplary damages is
excessive. In the exercise of our discretion, We reduce the award of damages to
P40,000.00 as moral damages and P10,000.00 as exemplary damages (See General
Bank. v. C.A., G.R. No. L-42724, April 9, 1985).
The second ground raised by complainant, that is, that individual respondent Jesus
T. Maglutac should be held jointly and severally liable with Commart, is also
meritorious. In the case of Chua V. NLRC, G.R. 81450, Feb. 15, 1990, citing the case of
A.C. Ransom Labor Union - CCLU v. NLRC, 142 SCRA 269, We affirmed the finding of
the Labor Arbiter and the NLRC that the vice-president of a corporation who was the
most ranking officer of the corporation can be held jointly and severally liable with the
corporation for the payment of the unpaid wages of its president. It was held:
"We resolve the issue in the light of the precedent set in the case
of A.C. Ransom Labor Union -CCLU v. National Labor Relations Commission (142
SCRA 269 [1986]). In this case, the Court set aside the decision of the NLRC upholding
the personal non-liability of the individual officers and agents of the corporation unless
they have acted beyond the scope of their authority. In thus reversing the NLRC
decision, the Court ruled that the president or presidents of the corporation may be held
liable for the corporations's obligations to its workers.
'The Court explained:
'(c) Employer includes any person acting in the interest of an employer directly or
indirectly. The term shall not include any labor organization or any of its officers or
agents except when acting as employer.
'x x x Since RANSOM is an artificial person, it must have an officer who can be
presumed to be the employer, being the 'person acting in the interest of employer,'
RANSOM. The Corporation, only in the technical sense is the employer.'
'The responsible officer of an employer corporation can be held personally, not to say
even criminally, liable for non-payment of backwages. x x x ' (At pp. 273-274;
Underlining supplied)
'x x x
'This court continued:
'x x x
'(d) The record does not clearly identify 'the officer or officers of RANSOM directly
responsible for failure to pay backwages of the 22 strikers. In the absence of definite
proof in that regard, we believe it should be presumed that the responsible officer is the
President of the corporation who can be deemed the chief operation officer
thereof. Thus, in RA 602, criminal responsibility is with the 'manager or in his default,
the person acting as such.' In RANSOM, the President appears to be the Manager." (At
p. 274)
"In the instant case, it was correct for the private respondent to have impleaded the
petitioner in the complaint considering that the latter was the highest and most ranking
official of the corporation after the private respondent had resigned. Certainly, there
should be an officer directly responsible for the failure to pay the wages of the
corporation's president. In this case, such officer happened to be the vice-president."
And, in the later case of Gudez, et al., v. NLRC, et al., G.R. 83023, March 23,
1990, We held the president and treasurer, Herminia Crisologo, jointly and severally
liable with the corporation. In the said case, the employer corporation, Retired Army
Protective Security Agency, Inc. (RAPSA), was ordered to cease operations and the
corporation, on the same day when the Labor Arbiter promulgated its decision, filed a
petition for voluntary insolvency, We held:
"x x x. The foregoing circumstances make it more necessary to hold
respondent Crisologo liable for the claims due to petitioners; otherwise, any decision
that would be rendered in favor of the latter would be useless and ineffective for there
would no one against whom it can be enforced."
The same circumstances obtain in the instant case in the light of the manifestation
of Commart that it had become insolvent and that it had suspended operations.
Moreover, not only was Jesus T. Maglutac the most ranking officer of Commart at the
time of the termination of the complainant, it was likewise found that he had a direct
hand in the latter's dismissal. The Labor Arbiter therefore, correctly ruled that Jesus
T. Maglutac was jointly and severally liable with Commart.
In G.R. No. 78637, Jesus T. Maglutac would want Us to reverse the findings of the Labor
Arbiter and the NLRC that complainant Jose M. Maglutac was dismissed without just
cause. The matter, being factual, is beyond the authority of this court to review. Factual
findings of administrative agencies are generally final and binding upon this Court when
supported by substantial evidence as in the instant case.
Likewise, respondents' claim that they were denied due process because the Labor
Arbiter rendered judgment on the basis of complainant's reply-position paper without
furnishing them a copy thereof, is not meritorious. Where the records show that in
response to the complaint before the Labor Arbiter rendered his decision, Commart and
Jesus T. Maglutac submitted a position paper, complete with annexes where they set out
and argued the factual as well as the legal basis of their positions, their due process
argument must fail. (see Llora Motors, Inc. v. Franklin Drilon, G.R. 82895, 7 Nov.
1989) The procedure by which issues are resolved based on position papers, affidavits
and other documentary evidence is recognized as not violative of due process (AMS
Farming Corp. v. Pura Ferrer-Calleja, G.R. No. 80557, Feb. 1988). The failure of
complainant to serve a copy of his Reply?Position Paper is therefore, not fatal, it having
been established that Commart and Jesus T. Maglutac were afforded a reasonable
opportunity to present their sides. Moreover, the existence of the letters written by
individual respondent Jesus T. Maglutac encouraging the formation of MM
International was never denied by him before the NLRC nor before this Court.
"While an employer has its own interests to protect, and pursuant thereto, it may
terminate a managerial employee for a just cause, such prerogative to dismiss or lay-off
an employee must be exercised without abuse of discretion. Its implementation should
be tempered with compassion and understanding. The employer should bear in mind
that in the execution of said prerogative, what is at stake is not only
the employees position but his livelihood. The fact that one is a managerial employee
does not by itself exclude him from the protection of the constitutional guarantee of
security of tenure (Santo v. NLRC, G.R. 76991, Oct. 28, 1988).
One final point. It cannot now be expected that the harmonious and pleasant working
relationship between the parties in this case prior to the bringing of the derivative suit
with the Securities and Exchange Commission and the filing of complaint for illegal
dismissal with the Labor Arbiter, can be revived. The relationship had been so strained
that to order the reinstatement of the complainant would not be wise. Where the
relationship of employer to employee is so strained and ruptured as to preclude a
harmonious working relationship should reinstatement of the employee be decreed, the
latter should be afforded the right to separation pay where the employer does not have
to endure the continued services of the employee in whom it has lost confidence
(Esmalin v. NLRC, G.R. 67880, 15 September 1989, Bautista v. Enciong, G.R. No. L-
52824, 16 March 1988, Asiaworld Publishing House Inc., v. Hon. Ople, et al., G.R. No.
56398, July 23, 1987).
ACCORDINGLY, a decision is hereby rendered as follows:
1. In G.R. No. 78345, the petition is GRANTED. The decision of the Labor Arbiter is
REINSTATED but the award of damages is reduced to P40,000.00 as moral damages
and P10,000.00 as exemplary damages. In lieu of reinstatement, private respondents
are ordered to pay complainant separation pay of one month salary for every year of
service in addition to his backwages equivalent to three years.
2. In G.R. No. 78637, the petition is DISMISSED.
 ATTY. WILFREDO TAGANAS
vs
NATIONAL LABOR RELATIONS COMMISSION, MELCHOR ESCULTURA, ET AL.

Petitioner Atty. Wilfredo E. Taganas represented herein private respondents in a labor suit for illegal
dismissal, underpayment and non-payment of wages, thirteenth-month pay, attorney's fees and damages
conditioned upon a contingent fee arrangement granting the equivalent of fifty percent of the judgment
award plus three hundred pesos appearance fee per hearing. 1 The Labor Arbiter ruled in favor of private
respondents and ordered Ultra Clean Services (Ultra) and the Philippine Tuberculosis Society, Inc., (PTSI)
respondents therein, jointly and severally to reinstate herein private respondents with full backwages, to
pay wage differentials, emergency cost of living allowance, thirteenth-month pay and attorney's fee, but
disallowed the claim for damages for lack of basis. 2 This decision was appealed by Ultra and PTSI to the
National Labor Relations Commission (NLRC), and subsequently by PTSI to the Court but to no avail.
During the execution stage of the decision, petitioner moved to enforce his attorney's charging lien. 3 Private
respondents, aggrieved for receiving a reduced award due to the attorney's charging lien, contested the
validity of the contingent fee arrangement they have with petitioner, albeit four of the fourteen private
respondents have expressed their conformity thereto. 4

Finding the arrangement excessive, the Labor Arbiter ordered the reduction of petitioner's contingent fee
from fifty percent of the judgment award to ten percent, except for the four private respondents who earlier
expressed their conformity. 5 Petitioner appealed to NLRC which affirmed with modification the Labor
Arbiter's order by ruling that the ten percent contingent fee should apply also to the four respondents even
if they earlier agreed to pay a higher percentage. 6 Petitioner's motion for reconsideration was denied,
hence this petition for certiorari.

The sole issue in this petition is whether or not the reduction of petitioner's contingent fee is warranted.
Petitioner argues that respondent NLRC failed to apply the pertinent laws and jurisprudence on the factors
to be considered in determining whether or not the stipulated amount of petitioner's contingent fee is fair
and reasonable. Moreover, he contends that the invalidation of the contingent fee agreement between
petitioner and his clients was without any legal justification especially with respect to the four clients who
manifested their conformity thereto. We are not persuaded.

A contingent fee arrangement is an agreement laid down in an express contract between a lawyer and a
client in which the lawyer's professional fee, usually a fixed percentage of what may be recovered in the
action is made to depend upon the success of the litigation. 7 This arrangement is valid in this jurisdiction.
8 It is, however, under the supervision and scrutiny of the court to protect clients from unjust charges. 9
Section 13 of the Canons of Professional Ethics states that "[a] contract for a contingent fee, where
sanctioned by law, should be reasonable under all the circumstances of the case including the risk and
uncertainty of the compensation, but should always be subject to the supervision of a court, as to its
reasonableness". Likewise, Rule 138, Section 24 of the Rules of Court provides:

Sec. 24. Compensation of attorneys; agreement as to fees. — An attorney shall be entitled to have
and recover from his client no more than a reasonable compensation for his services, with a view to the
importance of the subject-matter of the controversy, the extent of the services rendered, and the
professional standing of the attorney. No court shall be bound by the opinion of attorneys as expert
witnesses as to the proper compensation but may disregard such testimony and base its conclusion on its
own professional knowledge. A written contract for services shall control the amount to be paid therefor
unless found by the court to be unconscionable or unreasonable.

When it comes, therefore, to the validity of contingent fees, in large measure it depends on the
reasonableness of the stipulated fees under the circumstances of each case. The reduction of
unreasonable attorney's fees is within the regulatory powers of the courts. 10

We agree with the NLRC's assessment that fifty percent of the judgment award as attorney's fees is
excessive and unreasonable. The financial capacity and economic status of the client have to be taken into
account in fixing the reasonableness of the fee. 11 Noting that petitioner's clients were lowly janitors who
receive miniscule salaries and that they were precisely represented by petitioner in the labor dispute for
reinstatement and claim for backwages, wage differentials, emergency cost of living allowance, thirteenth-
month pay and attorney's fees to acquire what they have not been receiving under the law and to alleviate
their living condition, the reduction of petitioner's contingent fee is proper. Labor cases, it should be
stressed, call for compassionate justice.

Furthermore, petitioner's contingent fee falls within the purview of Article 111 of the Labor Code. This article
fixes the limit on the amount of attorney's fees which a lawyer, like petitioner, may recover in any judicial or
administrative proceedings since the labor suit where he represented private respondents asked for the
claim and recovery of wages. In fact, We are not even precluded from fixing a lower amount than the ten
percent ceiling prescribed by the article when circumstances warrant it. 12 Nonetheless, considering the
circumstances and the able handling of the case, petitioner's fee need not be further reduced.

The manifestation of petitioner's four clients indicating their conformity with the contingent fee contract did
not make the agreement valid. The contingent fee contract being unreasonable and unconscionable the
same was correctly disallowed by public respondent NLRC even with respect to the four private
respondents who agreed to pay higher percentage. Petitioner is reminded that as a lawyer he is primarily
an officer of the court charged with the duty of assisting the court in administering impartial justice between
the parties. When he takes his oath, he submits himself to the authority of the court and subjects his
professional fees to judicial control. 13

WHEREFORE, finding no grave abuse of discretion the assailed NLRC decision is hereby affirmed in toto.
Jang Lim v. NLRC (G.R. No. 124630)

Facts:

Respondent Cotabato Timberland Company Inc is a company engaged in the production

and manufacture of plywood and veneer. Respondent tapped and hired Teddy Arabi
whose main task is simply to recruit herein petitioners to perform milling and pilling works.
Being exploited and underpaid, a group of disgruntled workers filed a complaint for unpaid
labor standards benefits against CTCI. The parties settled but CTCI made it appear that
Arabi was petitioners’ employer and the one who paid their claims. Subsequently, after
being warned that management was dissatisfied with their work performance, CTCI
terminated petitioners without due process. Thus, petitioners filed a complaint for illegal
dismissal and payment of monetary claims against CTCI. The Labor Arbiter found in favor
of petitioners. NLRC tribunal reversed the decision stating that no employer-employee
relationship existed between petitioners and CTCI, and that Teddy Arabi being an
independent contractor was the real employer of petitioners.

Issues:

(1) Whether or not petitioners are employees of CTCI.

(2) Whether or not Teddy Arabi is an independent contractor.

Ruling:

(1) YES. CTCI exercised the power of control over the employees. The work activities
and schedules of petitioners were set by CTCI. Evidence of CTCI’s absolute control and
supervision over the manner and conduct of work of the petitioners can be established
from the following: (1) the manning/shifting schedules of the petitioners were entirely
prepared and approved by CTCI; and (2) photocopies of the company identification cards
bearing the name of the CTCI and likewise countersigned by CTCI’s Personnel Officer.
Also, the fact that petitioners herein were advised that “the management of CTCI has
been dissatisfied with their work performance and production output results” undoubtedly
indicate CTCI’s power to regulate and direct the means and methods to be utilized in
petitioners’ work. We find that the petitioners performed usual, regular and necessary
services for petitioner’s production of goods. In Zanotte Shoes v. NLRC, it was held that
there is an employer-employee relationship where the work performed is clearly related
to, and in the pursuit of, the principal business activity of the employer.
(2) NO. The allegations that Arabi has sufficient capitalization or that he has investments
in the form of tools, equipment, machineries, and work premises, are entirely
unsubstantiated. In our view what clearly appears here is that Arabi is a mere agent of
CTCI. His only job is to recruit and hire manpower as needed. Arabi is definitely not an
independent contractor. Therefore, it is not Arabi but CTCI which is responsible to
petitioners who must be deemed employed not by Arabi but by the company.
G.R. No. 83234 April 18, 1989

OSIAS ACADEMY, petitioner,

vs.
THE DEPARTMENT OF LABOR AND EMPLOYMENT, CONCHITA G. MERCADO and CELERIO
MERCADO, respondents.

Jose P. Villamor, Jr. for petitioner.

The Solicitor General for public respondent.

NARVASA, J.:

The award by the respondent Minister of Labor 1 of separation pay, on grounds of equity, to two
employees 2 of petitioner Osias Academy despite the avowedly correct grant of clearance to it to
terminate the services of said employees on the ground of loss of confidence based on a satisfactory
showing of embezzlement of company funds, serious misconduct, etc., is challenged in the special
civil action of certiorari at bar. The award is made to rest on this Court's ruling in San Miguel
Corporation vs. the Deputy Minister of Labor and Employment et al., G.R. Nos. L-61232-33,
December 29,1983,145 SCRA 196.

A similar issue was involved in a case recently decided by this Court en banc Philippine Long
Distance Telephone Company vs. NLRC, et al., G.R. No. 80609, August 23,1988. In that case, this
Court undertook a review of past precedents, sanctioning the grant of separation pay to employees
dismissed for some just cause, namely, Firestone Tire and Rubber Company of the Philippines vs.
Lariosa 3 Soco v. Mercantile Corporation of Davao,4 Filipro, Inc. vs. NLRC 5 Metro Drug Corporation
vs. NLRC,6 Engineering Equipment, Inc, vs. NLRC 7 New Frontier Mines, Inc. vs. NLRC 8 and San
Miguel Corporation vs. Deputy Minister of Labor and Employment, et al. 9 It was noted that these
cases constituted an exception to the rule in the Labor Code that a person dismissed for cause is not
entitled to separation pay, the exception being based on considerations of equity. The Court
observed, however, that the cited decisions had "not been consistent as to the justification for the
grant of separation pay in the amount and rate of such award," and pointed out the need for a re-
examination of the policy therein enunciated, in order to rationalize the exception, "to make it fair to
both labor and management, especially to labor." The Court then proceeded to lay down the
following principles 10 which are hereby re-affirmed:

There should be no question that where it comes to such valid but not iniquitous
causes as failure to comply with work standards, the grant of separation pay to the
dismissed employee may be both just and compassionate, particularly if he has
worked for some time with the company. For example, a subordinate who has
irreconcilable policy or personal differences with his employer may be validly
dismissed for demonstrated loss of confidence, which is an allowable ground. A
working mother who has to be frequently absent because she has also to take care
of her child may also be removed because of her poor attendance, this being another
authorized ground. It is not the employee's fault if he does not have the necessary
aptitude for his work but on the other hand the company cannot be required to
maintain him just the same at the expense of the efficiency of its operations. He too
may be validly replaced. Under these and similar circumstances, however, the award
to the employee of separation pay would be sustainable under the social justice
policy even if the separation is for cause.
 But where the cause of the separation is more serious than mere inefficiency, the
generosity of the law must be more discerning. There is no doubt it is compassionate
to give separation pay to a salesman if he is dismissed for his inability to fill his quota
but surely he does not deserve such generosity if his offense is misappropriation of
the receipts of his sales. This is no longer mere incompetence but clear dishonesty.
A security guard found sleeping on the job is doubtless subject to dismissal but may
be allowed separation pay since his conduct, while inept, is not depraved. But if he
was in fact not really sleeping but sleeping with a prostitute during his tour of duty
and in the company premises, the situation is changed completely. This is not only
inefficiency but immorality and the grant of separation pay would be entirely
unjustified.

We hold that henceforth separation pay shall be allowed as a measure of social

justice only in those instances where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral character. Where the
reason for the valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the
employer may not be required to give the dismissed employee separation pay, or
financial assistance, or whatever other name it is called, on the ground of social
justice.

A contrary rule would, as the petitioner correctly argues, have the effect of rewarding
rather than punishing the erring employee for his offense. And we do not agree that
the punishment is his dismissal only and that the separation pay has nothing to do
with the wrong he has committed. Of course it has. Indeed, if the employee who
steals from the company is granted separation pay even as he is validly dismissed, it
is not unlikely that he will commit a similar offense in his next employment because
he thinks he can expect a little leniency if he is again found out. This kind of
misplaced compassion is not going to do labor in general any good as it will
encourage the infiltration of its ranks by those who do not deserve the protection and
concern of the Constitution.

The policy of social justice is not intended to countenance wrongdoing simply

because it is committed by the underprivileged. At best it may mitigate the penalty
but it certainly will not condone the offense. Compassion for the poor is an imperative
of every humane society but only when the recipient is not a rascal claiming an
undeserved privilege. Social justice cannot be permitted to be the refuge of
scoundrels any more than can equity be an impediment to the punishment of the
guilty. Those who invoke social justice may do so only if their hands are clean and
their motives blameless and not simply because they happen to be poor. This great
policy of our Constitution is not meant for the protection of those who have proved
they are not worthy of it, like the workers who have tainted the cause of labor with the
blemishes of their own character.

In light of the foregoing propositions, it is evident that the grant of separation pay to the private
respondents is unjustified, they having been dismissed for causes reflecting on their moral character.

WHEREFORE, the order of respondent Minister of Labor dated January 16, 1987, upholding the
grant by the Regional Director to petitioner Academy of clearance to terminate the services of the
respondent spouses, is AFFIRMED except for the grant of separation pay to the latter which is
hereby DISALLOWED.
 [G.R. No. 149629. January 10, 2005]

GUSTILO vs. WYETH PHILS.

THIRD DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated JAN 10 2005.

G.R. No. 149629 (Alan D. Gustilo vs. Wyeth Phils., Inc., Filemon Verzano, Jr., Aurelio Mercado and Edgar
Epilepsia.)

Before us for resolution are: (1) the motion of Alan D. Gustilo, petitioner, seeking a reconsideration of our
Decision dated October 4, 2004 denying his petition for review on certiorari; and (2) joint comment of Wyeth
Phils., Inc., Filemon Verzano, Jr., Aurelio Mercado and Edgar Epilepsia, respondents.

In the instant motion for reconsideration, petitioner contends that we erred in affirming the Appellate Court's
finding that he was legally dismissed from the service.

He emphasized that his past infractions could not be used as justification for his dismissal from the service as
it would be tantamount to "double jeopardy or vexing him twice for the same offense." Besides, he claims that
these disciplinary sanctions were actually respondent Verzano's "retaliatory measures" against him.

In their joint comment on the motion, respondents assert that dismissal of petitioner from the service is not
tainted with illegality or bad faith considering that he was a habitual offender who committed numerous
contraventions of respondent company's disciplinary rules and regulations.

It bears reiterating that petitioner did not only violate the company's disciplinary rules and
regulations. As found by the Court of Appeals, he falsified his employment application form by not
stating therein that he is the nephew of Mr. Danao, respondent Wyeth's Nutritional Territory
Manager. Also, on February 2, 1993, he was suspended for falsifying a gasoline receipt. On June 28,
1993, he was warned for submitting a false report of his trade outlet calls. On September 8, 1993, he
was found guilty of unauthorized availment of sick, vacation and emergency leaves. His dismissal
from the service is, therefore, in order.

In Stellar Industrial Services, Inc. vs. NLRC,[1] we ruled that "previous infractions may be used as
cralaw

justification for an employee's dismissal from work in connection with a subsequent similar offense."

Similarly, in Philippine Rabbit Bus Lines, Inc. vs. NLRC,[2] we held:

cralaw

"Nor can it be plausibly argued that because the offenses were already given the appropriate sanctions, they
cannot be taken against him. They are relevant in assessing private respondent's liability for the present
violation for the purpose of determining the appropriate penalty. To sustain private respondent's argument
that the past violation should not be considered is to disregard the warning previously issued to him."

Indeed, in Piedad vs. Lanao del Norte Electric Cooperative, Inc.,[3] we stressed that a series of irregularities
cralaw

when put together may constitute serious misconduct, which under Article 282 of the Labor Code, as
amended,[4] is a just cause for dismissal.
cralaw

Anent movant's claim that his dismissal from the service was actually respondent Verzano's "retaliatory
measure" against him, suffice it to say that it has no merit.

WHEREFORE, the motion for reconsideration is hereby DENIED.

SO ORDERED.
DBP VS. NLRC ET AL DIGEST

DECEMBER 19, 2016 ~ VBDIAZ

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. THE NATIONAL LABOR

RELATIONS COMMISSION, ONG PENG, ET AL., respondents.,

G.R. No. 100264-81; Jan 29, 1993

FACTS:

November 14, 1986, private respondents filed with DOLE- Daet, Camarines Norte, 17
individual complaints against Republic Hardwood Inc. (RHI) for unpaid wages and
separation pay. These complaints were thereafter endorsed to Regional Arbitration Branch
of the NLRC since the petitioners had already been terminated from employment.
RHI alleged that it had ceased to operate in 1983 due to the government ban against tree-
cutting and that in May 24, 1981, its sawmill was totally burned resulting in enormous
losses and that due to its financial setbacks, RHI failed to pay its loan with the DBP. RHI
contended that since DBP foreclosed its mortgaged assets on September 24,1985, then any
adjudication of monetary claims in favor of its former employees must be satisfied against
DBP. Private respondent impleaded DBP.
Labor Arbiter favored private respondents and held RHI and DBP jointly and severally
liable to private respondents. DBP appealed to the NLRC. NLRC affirmed LA’s judgment.
DBP filed M.R. but it was dismissed. Thus, this petition for certiorari.
ISSUE:

(1) Whether the private respondents are entitled to separation pay.

(2) Whether the private respondents’ separation pay should be preferred than the DBP’s
lien over the RHI’s mortgaged assets.
RULING:

Yes. Despite the enormous losses incurred by RHI due to the fire that gutted the sawmill in
1981 and despite the logging ban in 1953, the uncontroverted claims for separation pay
show that most of the private respondents still worked up to the end of 1985. RHI would
still have continued its business had not the petitioner foreclosed all of its assets and
properties on September 24, 1985. Thus, the closure of RHI’s business was not primarily
brought about by serious business losses. Such closure was a consequence of DBP’s
foreclosure of RHI’s assets. The Supreme Court applied Article 283 which provides:
“. . . in cases of closures or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent to 1 month
pay or at least 1/2 month pay for every year of service, whichever is higher. . . .”
(2) No. Because of the petitioner’s assertion that LA and NLRC incorrectly applied the
provisions of Article 110 of the Labor Code, the Supreme Court was constrained to grant
the petition for certiorari.
Article 110 must be read in relation to the Civil Code concerning the classification,
concurrence and preference of credits, which is application in insolvency proceedings
where the claims of all creditors, preferred or non-preferred, may be adjudicated in a
binding manner. Before the workers’ preference provided by Article 110 may be invoked,
there must first be a declaration of bankruptcy or a judicial liquidation of the employer’s
business.
NLRC committed grave abuse of discretion when it affirmed the LA’s ruling. DBP’s lien on
RHI’s mortgaged assets, being a mortgage credit, is a special preferred credit under Article
2242 of the Civil Code while the workers’ preference is an ordinary preferred
credit under Article 2244.
A distinction should be made between a preference of credit and a lien. A preference
applies only to claims which do not attach to specific properties. A lien creates a charge on
a particular property. The right of first preference as regards unpaid wages recognized by
Article 110 does not constitute a lien on the property of the insolvent debtor in favor of
workers. It is but a preference of credit in their favor, a preference in application. It is a
method adopted to determine and specify the order in which credits should be paid in the
final distribution of the proceeds of the insolvent’s assets. It is a right to a first preference
in the discharge of the funds of the judgment debtor.
Article 110 of the Labor Code does not create a lien in favor of workers or employees for
unpaid wages either upon all of the properties or upon any particular property owned by
their employer. Claims for unpaid wages do not therefore fall at all within the category of
specially preferred claims established under Articles 2241 and 2242 of the Civil Code,
except to the extent that such claims for unpaid wages are already covered by Article 2241,
(6)- (claims for laborers’ wages, on the goods manufactured or the work done); or by Article
2242,(3)- (claims of laborers and other workers engaged in the construction, reconstruction
or repair of buildings, canals and other works, upon said buildings, canals and other works.
Since claims for unpaid wages fall outside the scope of Article 2241 (6) and 2242 (3), and
not attached to any specific property, they would come within the category of ordinary
preferred credits under Article 2244.
(Note: SC favored DBP kasi yung mortgage nila against RHI was executed prior to the
amendment of Article 110. The amendment can’t be given retroactive effect daw. Pero sa
present, 1st priority na talaga ang laborer’s unpaid wages regardless kung may mortgage
or wala ang ibang creditors ng employer)
Article 110 of the Labor Code has been amended by R.A. No. 6715 and now reads:
“Article 110. Worker preference in case of bankruptcy. – In the event of bankruptcy or
liquidation of an employers business, his workers shall enjoy first preference as regards their
unpaid wages and other monetary claims, any provision of law to the contrary
notwithstanding. Such unpaid wages, and monetary claims shall be paid in full before the
claims of the Government and other creditors may be paid.”
The amendment “expands worker preference to cover not only unpaid wages but also
other monetary claims to which even claims of the Government must be deemed
subordinate.” Hence, under the new law, even mortgage credits are subordinate to
workers’ claims.
R.A. No. 6715, however, took effect only on March 21, 1989. The amendment cannot
therefore be retroactively applied to, nor can it affect, the mortgage credit which was
secured by the petitioner several years prior to its effectivity.
Even if Article 110 and its Implementing Rule, as amended, should be interpreted to mean
`absolute preference,’ the same should be given only prospective effect in line with the
cardinal rule that laws shall have no retroactive effect, unless the contrary is provided. To
give Article 110 retroactive effect would be to wipe out the mortgage in DBP’s favor and
expose it to a risk which it sought to protect itself against by requiring a collateral in the
form of real property.
The public respondent, therefore, committed grave abuse of discretion when it
retroactively applied the amendment introduced by R.A. No. 6715 to the case at bar.
Petition GRANTED. Decision of NLRC SET ASIDE.
MAM REALTY CORPORATION v. NLRC, CELSO BALBASTRO

GR 114787, 02 June 1995

Corporation Law Case Digest by John Paul C. Ladiao (15 March 2016)

(Topic: Doctrine of Piercing the Veil of Corporate Fiction)

FACTS:

a complaint filed with the Labor Arbiter by private respondent Celso B. Balbastro against herein
petitioners, MAM Realty Development Corporation ("MAM") and its Vice President Manuel P. Centeno,
for wage differentials, "ECOLA," overtime pay, incentive leave pay, 13th month pay (for the years 1988
and 1989), holiday pay and rest day pay. Balbastro alleged that he was employed by MAM as a pump
operator in 1982 and had since performed such work at its Rancho Estate, Marikina, Metro Manila.

MAM countered that Balbastro had previously been employed by Francisco Cacho and Co., Inc., the
developer of Rancho Estates. Sometime in May 1982, his services were contracted by MAM for the
operation of the Rancho Estates' water pump. He was engaged, however, not as an employee, but as a
service contractor, at an agreed fee of P1,590.00 a month. Similar arrangements were likewise entered
into by MAM with one Rodolfo Mercado and with a security guard of Rancho Estates III Homeowners'
Association. Under the agreement, Balbastro was merely made to open and close on a daily basis the
water supply system of the different phases of the subdivision in accordance with its water rationing
scheme. He worked for only a maximum period of three hours a day, and he made use of his free time
by offering plumbing services to the residents of the subdivision. He was not at all subject to the control
or supervision of MAM for, in fact, his work could so also be done either by Mercado or by the security
guard. On 23 May 1990, prior to the filing of the complaint, MAM executed a Deed of Transfer, 1
effective 01 July 1990, in favor of the Rancho Estates Phase III Homeowners Association, Inc., conveying
to the latter all its rights and interests over the water system in the subdivision.

National Labor Relations Commission ("NLRC") rendered judgment on 21 March 1994, ordered MAM
Realty Development Corporation ("MAM") and its Vice President Manuel P. Centeno are hereby directed
to pay jointly and severally complainant the sum of P86,641.05.

ISSUE:

Whether or not that the NLRC erred in holding Centeno jointly and severally liable with MAM?
RULING:

NO.

the NLRC erred in holding Centeno jointly and severally liable with MAM. A corporation, being a juridical
entity, may act only through its directors, officers and employees. Obligations incurred by them, acting
as such corporate agents, are not theirs but the direct accountabilities of the corporation they
represent. True, solidary liabilities may at times be incurred but only when exceptional circumstances.

In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with the
corporation for the termination of employment of employees done with malice or in bad faith.

In the case at Bench, there is nothing substantial on record that can justify, prescinding from the
foregoing, petitioner Centeno's solidary liability with the corporation.

The case is REMANDED to the NLRC for a re-computation of private respondent's monetary awards,
which, conformably with this opinion, shall be paid solely by petitioner MAM Realty Development
Corporation. No special pronouncement on costs.
CALLANTA v. CARNATION PHILS., 145 SCRA 268, G.R. No. 70615 October 28, 1986

FACTS: Upon clearance approved by the MOLE Regional Office, respondent dismissed the
petitioner in June 1979. On July 1982, petitioner filed an illegal dismissal case with claim for
reinstatement with the Labor Arbiter, who granted it. On appeal, the NLRC reversed the
judgment based on the contention that the action by the petitioner has already prescribed,
since Art. 291 & 292 of the Labor Code is expressed that offenses penalized under the Code
and all money claims arising from employer-employee relationships shall be filed within 3
years from when such cause of action arises, otherwise it will be barred.

ISSUE: Is ruling of the NLRC correct?

HELD: No. It is a principle well recognized in this jurisdiction, that one's employment,
profession, trade or calling is a property right, and the wrongful interference therewith is an
actionable wrong. The right is considered to be property within the protection of the
Constitutional guarantee of due process of law.

Verily, the dismissal without just cause of an employee from his employment constitutes a
violation of the Labor Code and its implementing rules and regulations. Such violation,
however, does not amount to an "offense" as understood under Article 291 of the Labor Code.
In its broad sense, an offense is an illegal act which does not amount to a crime as defined in
the penal law, but which by statute carries with it a penalty similar to those imposed by law
for the punishment of a crime. The confusion arises over the use of the term "illegal dismissal"
which creates the impression that termination of an employment without just cause
constitutes an offense. It must be noted, however that unlike in cases of commission of any
of the prohibited activities during strikes or lockouts under Article 265, unfair labor practices
under Article 248, 249 and 250 and illegal recruitment activities under Article 38, among
others, which the Code itself declares to be unlawful, termination of an employment without
just or valid cause is not categorized as an unlawful practice.